Brazil vehicle production rises in July 2019

The National Association of Automobile Manufacturers (Anfavea) presented the automotive industry balance sheet of July and of the first seven months of the year. For the automobiles sector, the result pointed to a 14.2% increase in vehicle production in Brazil compared to June 2019 and 8.4% compared to July 2018. It was the best month of July since 2013 for car production, light commercial vehicles, trucks, and buses.

Year-to-date, the increase is 3.6% over the same period last year, despite the 38.4% drop in exports caused by the crisis of Argentina, our main trading partner.

The following graph uses data from Anfavea to show the trends of light vehicle production and exports between 2012 and July 2019 in Brazil:

The domestic market also remains higher than Anfavea’s 11.4% forecast earlier this year. In the first seven months, growth is 12.1% over 2018. It was the best July in sales since 2014, up 12% over the same month last year, and 9.1% over June this year, largely due to the four extra business days.

“We are optimistic about the start of the second half, a period that has traditionally had better results than the first half of the year. All the macroeconomic signals indicate a more positive scenario, not to mention all the structural reforms underway and short-term measures to inject resources into the Brazilian economy,” said Anfavea president Luiz Carlos Moraes.

The following graph uses data from Anfavea to show production and exports of trucks between 2012 and July 2019:

Low competitiveness in the international market

In addition to the monthly balance sheet, Anfavea shared with the press a presentation that shows the contradictions of a highly competitive domestic market, but with low international competitiveness.

On the one hand, we now have more than 60 brands competing in the national market for agricultural and road vehicles and machines, with an offer of almost 2,200 models and versions of all types, the vast majority (87.9%) produced locally. Not to mention dozens of brands that have passed through the country in recent decades, but have not resisted the fierce market dispute.

“In other large segments of the economy, the number of companies competing in the Brazilian market is generally counted on the fingers of one hand,” Moraes said. On the other hand, the low competitiveness of our market caused by high-cost Brazil prevents the greater access of domestic products to foreign markets. The exception is neighboring Argentina, where Brazilian vehicles represent 63.1% of sales. In Mexico, a free trade partner, only 5.8% of cars sold are made in Brazil.

In the rest of Latin America, which should be a great destination for products produced in Brazil, we did not reach a 10% share. It is even worse in other continents, where Brazilian cars can only snap up less than 1%.

The graph below shows exports of CKD trucks and light vehicles between January 2012 and July 2019:

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