Why the world’s automakers love Brazil

Joann Muller – Forbes, 10/05/2012

Here’s what the world looks like to a car guy inDetroit right now: In the U.S. new regulations are cranking up costs while cautious car buyers creep back into showrooms. China’s once-hot sales are cooling–fast. Europe is a total basket case, with too much production capacity and an allout price war. Carmakers from General Motors and Ford Motor to Volkswagen and Daimlerwarn of difficult times ahead. Market conditions, says VW Chief Executive Martin Winterkorn, have become “noticeably harder and tougher.”

But bring up Brazil and you get a smile. No, they’re not looking forward to a Rio vacation or a cheap retirement. What carmakers see when they look at Brazil is South America’s largest consumer market, a still-bustling economy–and a lot of potential customers. Forget that in the world’s fifth-largest country only 14% of the roads are paved. Incomes are rising, lifting almost 40 million more Brazilians into the middle class since 2003–and putting a vehicle purchase within their reach for the first time. “Brazil is at a critical point right now,” said Guido Vildozo, a Latin America specialist at market research firm IHS Automotive, noting that the country’s GDP has topped $10,000 per capita. “That’s a milestone. If you look back at the U.S., Europe, even Korea, you’ll see that this is when markets move to a growth stage. This is why we’re suddenly seeing all the carmakers focusing on Brazil. They want to try to capture a slice of that pie.”

Anfavea, Brazil’s auto industry trade group, forecasts sales will increase 68% from 3.4 million units in 2011 to 5.7 million by 2016, despite a massive tax burden and high borrowing costs thatdrive up car prices. (In the U.S. sales are forecast to rise 30%.) As early as 2015 Brazil could overtake Japan to become the world’s third-largest car market after China and the U.S., according to Roland Berger Strategy Consultants.

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General Motors halts production at plant in Brazil

Paulo Winterstein – The Wall Street Journal, 07/25/2012

SÃO PAULO—General Motors Co. suspended production for a day at its São José dos Campos plant in Brazil on Tuesday citing safety worries and prompting an outcry from the labor union that has been organizing protests against possible layoffs at the factory.

GM said in a statement that it suspended manufacturing to ensure the safety of the facility’s 7,500 employees. Workers at the plant walked off the job one day last week to protest expected job cuts. Tuesday’s shutdown is to be lifted Wednesday ahead of a scheduled meeting involving company, union and government officials, GM said.

“The company took into consideration strong evidence—in recent hours and days—of internal mobilizations at the plant and understands that the current moment is delicate and prefers not to expose its employees to incitement and provocations,” the auto maker said. GM said it would pay employees for the day, despite the suspension of production.

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GM union strikes at Brazil plant for 24 hours

Brad Haynes – Reuters, 07/17/2012

SAO PAULO, July 16 (Reuters) – A Brazilian union carried out a 24-hour strike at a General Motors Co factory on Monday to protest dwindling output on an assembly line where workers fear for the future of 1,500 jobs.

The Metalworkers Union of Sao Jose dos Campos said in a statement that the strike had paralyzed production at the plant, near Sao Paulo, which normally produces 750 vehicles per day. But a GM executive said many employees still came into work, allowing for production at a slower pace.

“On the first shift, which is the most productive, we had enough workers to continue above half capacity” said Luiz Moan, GM’s head of institutional relations in Brazil, in a telephone interview. He added that a third of workers on the second shift came in to work

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Brazil auto output dips in June despite sales jump

Alberto Alerigi and Brad Haynes – Reuters, 07/05/2012

SAO PAULO, July 5 (Reuters) – Automobile production in Brazil slipped in June despite a sharp jump in sales, as carmakers took advantage of tax breaks to draw down inventories but remained cautious about restarting idle production lines.

Auto output dipped 2.6 percent while sales jumped 22.9 percent in June from May, automakers association Anfavea said on Thursday.

In the first half of the year, production of new cars, trucks and buses fell more than 9 percent from a year earlier, as rising loan defaults and tighter lending choked demand in the Brazilian market that was booming just a year ago.

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Brazil car sales surge in June on tax break

Reuters, 07/02/2012

(Reuters) – Brazilian auto sales jumped to their best June ever, an industry source with access to sales data said on Monday, as tax breaks and lending incentives helped bolster a flagging car industry.

Sales of cars and light trucks advanced 24 percent in June from May to about 340,300 vehicles, according to the source, up 19 percent from a year earlier. Last month’s surge brought sales in the first half to 1.6 million vehicles, nearly even with the first half of 2011.

Daily sales volumes averaged around 17,000 vehicles in June, according to Thomson Reuters calculations, the strongest pace since November. Sales picked up from less than 13,000 per day in the first five months of the year.

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Ford sees late 2012 surge in Brazil market

Brad Haynes and Alberto Alerigi – Reuters, 06/15/2012

(Reuters) – Ford Motor Co (F.N) expects the Brazilian auto market to set a new sales record by the end of the year despite a sluggish start, as recent tax breaks and record-low interest rates jumpstart stagnant business at dealerships.

Rogerio Golfarb, Ford’s head of corporate affairs in South America, said in an interview on Thursday afternoon that the market would see “a really strong pickup in the second half of the year due to government measures.”

After sales more than doubled since 2005 amid a recent economic boom, Brazil’s car industry has struggled this year along with Latin America’s biggest economy. To spur consumer demand, Brazil’s government in recent months has cut taxes on select products, including cars, and encouraged the central bank to lower interest rates to historic lows.

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Brazil’s $1 million supercar

Viknesh Vijayenthiran – Fox News, 06/10/2012

A few years ago a design firm in Brazil started work on an ambitious new project to build from scratch an exciting new supercar capable of competing with some of Italy’s finest, both in looks and performance.

The original project was the DR7 from AmoritzGT, which at the time of its announcement looked very promising.

The DR7 has now evolved into the even more stunning DoniRosset supercar, named after the late Donino “Doni” Rosset and commissioned by his son William Denis Rosset.

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