Brazil loses power among global car producers
In the last few years, Brazil has always been among the ten largest vehicle producers in the world. The market potential of a continental country, from which South America can be supplied, seduced the top manufacturers from the United States, Europe, Japan and Korea. Attracted by incentives, these multinationals built a giant Industrial park.
Recently, however, the country has started to lose power on the global stage. The situation worsened with the arrival of a government that does not have the auto industry as a priority, the imminent end of tax benefits, the loss of consumer income and the weakening of exports by the Argentine economic crisis.
The most serious aspect, however, is that Brazil has already lost relevance in the development of new products, such as electric and autonomous cars and everything that involves the new transportation needs.
Since the first investment cycle, in the 1950s, carmakers knew how to deal with the economic instability of the region. They got used to demand fluctuations, knowing that after each crisis a period of bonanza would follow. There were new cycles of investments to expand the industrial park, which would sometimes operate at full steam, sometimes with high idleness.
In the last few years, Brazil managed to surpass major producers in the global ranking sometimes and lose positions other times. But since 2016, the country got stuck. The difference now, besides the pandemic, is that new obstacles make the possibility of recovery harder.
With 38 factories, the 23 carmakers in the country have the capacity to produce 5 million vehicles per year. The maximum they managed to reach was 3.7 million in 2013. After another downturn, the expectation was for a rebound this year and the production of 3 million units, but the pandemic dropped the forecast to less than 2 million.
International consultant Jaime Ardila says he wouldn't be surprised if at least one carmaker decided to leave Brazil. It is not so easy to close a vehicle factory, but one already can see moves in this direction.
Last year, Ford closed a factory in São Bernardo do Campo, state of São Paulo, an icon of the beginnings of the car industry in Brazil in the 1950s. Honda built two factories also in the state of São Paulo but later decided to concentrate production in one. Recently, Audi, which has a small production line, announced that it may give up making cars in the factory it shares with Volkswagen in Paraná. The reasons range from...
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