Automotive Blog

Is there any logic to Brazil's auto market?

Several protests took place in Brazil during the month of June. Everything started with public transportation fares that were increased, although the increases were less than $0.10. And even after the increase was cancelled, protests kept going on, focusing on corruption, the amount spent to build stadiums for the World Cup, poor educational and health systems despite high taxes, amongst other things. (For more about the protests, see the links at the bottom of the blog.)

Ironically, protests that stopped the main cities of the country did not impact the registration of new light vehicles. Almost 303,000 units were registered in June according to preliminary figures – a deviation of a mere -0.2% from Polk’s light vehicle forecast of 302,237 units. 

It is true that registrations fell 11% from a year ago, but only because June 2012 was such a great month. Last year, tax incentives played a major role in light vehicle registrations and June was the first full month benefiting from them. As a result, it was the third best month for sales in 2012. However, registrations from last month increased 0.8% compared to May.

The Brazilian market does not follow economic, or even social logic. Last year, for example, GDP growth was only 0.9% but light vehicle sales soared 6.1%. While the U.S. market dropped 22% in 2009, Brazilians bought 13.4% more light vehicles. During 2009, the government also reduced taxes to keep the market alive.

Economic Growth vs. Automotive Growth

I never believed that next year's World Cup and the 2016 Summer Olympic Games would drag more people to dealers. The country literally stops to watch Brazil play during a World Cup, and I see customers going to stadiums and watching other national teams playing there. But I may be wrong. People may not be watching the games, they may be too busy protesting! But I'm fairly sure that whatever they are doing, they will not be buying new cars.

Note: You can read more about the protests with these links:

Augusto Amorim is senior analyst, South American light vehicle production forecast, IHS Automotive

Posted on July 09, 2013

About The Author

Augusto creates our South America light vehicle forecasts. With a background in journalism (he worked in the Brazilian press for 12 years) and a master's degree in consumer behavior, in addition to an MBA, Augusto is a great fit at IHS Automotive. Add to that his passion for cars and you have the perfect forecaster (not to mention blogger!) Augusto uses his eye for detail – double and triple checking his forecasted volumes and ensuring our data is the best available in order to help bring market success to our clients. He likes to get his work done on time and get it done right! As part of his forecasts, Augusto also writes reports about Brazil and tries to make the clients understand the reality down there. The government keeps changing the rules and that can be very complex for a foreigner.

Augusto first came to the United States in 2010 to work on his MBA in Boston. Augusto's family is located in Brazil but thanks to Skype, they remain in close touch. Although born and raised in Sao Paulo, Augusto is unusual because he doesn't care for soccer, doesn’t dance the samba and claims that the sun and his skin are not friends. When he's not working hard on his forecasts, Augusto loves to travel and is always amazed by how much he learns on his trips. So far, he has visited 27 different countries. A self-proclaimed "foodie," he also enjoys discovering new restaurants and coffee shops, where he regularly orders a cappuccino.