HOME Research Insight Automobile Manufacturing Industry − New Revenue Pockets

Automobile Manufacturing Industry − New Revenue Pockets

Brazil is home to most of the advanced automobile OEMs such as Volkswagen Group, Fiat Chrysler Automobiles, Renault, PSA, General Motors, and Ford Motors. The vehicle production is seventh largest in the entire world; where as the automobile production is growing at a rate significantly higher than Argentina and other countries in the region such as Chile, Columbia, Peru, and Venezuela.

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Brazil To Remain Dominant

The market is achieving greater heights in the South American region. Brazil is the major market for all the original equipment manufacturers (OEM’s) who have set up their production units in this country and are investing heavily in order to expand their capacities so as to fulfill the ever-growing demand for new vehicles. The major restraint for the Brazilian auto manufacturing industry is the rising costs for the raw materials. The Brazilian government has increased the import restrictions on the raw materials that are needed in the manufacturing process, thereby, reducing the available stock and increasing the costs of the raw materials available locally. Although, other factors such as the fast economic recovery after the global financial crisis and the regional agreements between Brazil and other countries provide a positive outlook for the industry.

Passenger Cars: Largest Volume-Generating Segment

Brazil has the biggest passenger cars market in the complete South American region. It is the leader in the manufacturing of passenger cars across the entire Latin American region. The LCV industry in South America is growing at a significantly higher rate than that of passenger cars, but, passenger cars have the largest volume and are expected to maintain their top spot in the region over the next five years. The high growth in this segment is accountable to the high growth in GDP, cheap labour, fast-growing FDIs, and untapped potential, which attracts automobile manufacturers to this region.

Green Vehicles And Increasing Export Demand: Opportunistic Market

The other fuel types that consist of bio-ethanol fuel, natural gas vehicles (NGVs), electric vehicle, etc., are the future of automobile industry, globally. This is the segment in which most of the OEMs are investing heavily for R&D purpose. Argentina already has one of the world’s largest NGV fleet and Brazil is the biggest consumer for bio-ethanol. This is because of the growing concern over the environment problems caused by fossil fuels such as gasoline and diesel. The governments in the Latin American countries have made new mandates regarding the reduction in permissible emission levels. Therefore, the automobile manufacturers are investing more into the bio-ethanol or flex-fuel and cleaner fuel technologies, so as to increase the fuel efficiency while catering to the passenger car demands from the consumer. The market for AFVs has been growing at a much higher rate than that of gasoline-dependent or diesel-dependent vehicles in the South American region. This growth can be considered as a sign of the emerging opportunities that these automobile manufacturers will experience in the AFVs segment.

Related Reports:

South American Automotive Production Outlook to 2018 by Vehicle Type (Passenger Cars, LCV, and HCV), Fuel Type (Gasoline, Diesel, and Others) and Key Country Level Markets (Brazil and Argentina)

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