Brazil extends tax breaks to achieve 4 million record-high sales in 2013

Import restrictions impact Argentina's sales results

2013/06/19

Summary

Vehicle production and sales in Brazil In Brazil and Argentina, the automotive industry has been influenced by the governments' protectionist measures and complex tax systems.

 Brazil's vehicle sales in 2012 reached a record high of 3.8 million units despite a stagnant economy. The government tax breaks on car purchases introduced in May 2012 helped achieve record sales. On the other hand, production in the same year declined by 1.9% y/y to 3.34 million units.

 In May 2013, Brazil National Association of Motor Vehicle Manufacturers (ANFAVEA) released the 2013 automotive market outlook. Thank to tax breaks extended until the end of the year and expected GDP growth of 3%, ANFAVEA forecasts that Brazil's auto sales volume in 2013 should rise 3.5% to 4.5% from a year ago to around four million units and production to 3.5 million units, up 4.5% y/y (including mid-sized/large commercial vehicles).

 Recently, the Brazilian government decided to raise the  industrial products tax (IPI) rate for imported vehicles by the end of 2017 to protect the domestic auto industry. Brazil's new automotive policy for 2013-2017 also encourages domestic vehicle production by exempting the aforementioned IPI tax rate increase for the automakers that commit to localizing their production processes and investing in research and development in the country. In response to the new policy, Fiat, VW, GM, and many other OEMs which already have their plants in Brazil, have boosted their production capacities while BMW as well as a number of Chinese manufacturers including JAC and Chery plan to build new factories. Among Japanese OEMs, Toyota has completed construction of its new plant and launched a new compact Etios; Nissan is scheduled to produce the March and the Versa at a new plant with an annual capacity of 200,000 units; and Honda has been enhancing research and development capabilities in Brazil.

 Argentina's auto sales in 2012 fell by 6.0% y/y to 830,000 units while its production for the year dropped to 764,000 units, down 7.8% y/y. Sales of imported vehicles significantly declined due to the government's import restriction measures. A fall in production should be attributable to late deliveries of the parts affected by the import restrictions and vehicle sales downturn for the first half of 2013 in Brazil, Argentina's top export destination. For the period from January to April in 2013, Argentine sales and production have increased over the same period last year.


 According to LMC Automotive's forecast disclosed in Q1 2013, light vehicle sales in Brazil for 2013 are expected to increase by 3% y/y to 3.8 million units, supported by an economic recovery. In Brazil, growing protectionist tendencies, structural problems, and twin deficits (current account and budget) remain major concerns for long-term investment and economic growth. An expected recovery in investment ahead of the 2014 Soccer World Cup and the 2016 Olympic Games will help support job creation and income growth, in turn helping to sustain vehicle sales growth. LMC Automotive anticipates that sales should reach 4.6 million units by 2016 and continue to increase until 2020.

Related Reports:
Japanese suppliers expand production in Mexico and Brazil (Jun. 2013)
Mexico: production and export expect to reach new record highs in 2012 (Sep. 2012)


Brazil: sales and production increase to 1.16 million and 1.17 million respectively for Jan.-Apr. 2013

 Brazil's auto sales for the period from January to April 2013 rose by 8.2% y/y to 1.16 million units thanks to the extended tax breaks for vehicle purchases. Nevertheless, sales of imported vehicles continued to decline due to the higher tax rates. Production for the same period grew to 1.17 million units, up 17.0% y/y, while exports edged up by 3.8% from the period a year earlier.

Brazil's vehicle production and exports
(Units)
2008 2009 2010 2011 2012 2013
(Plan)		 Jan.-Apr.
2012		 Jan.-Apr.
2013
Production 3,054,725 3,077,761 3,381,728 3,407,861 3,342,617 3,490,000 998,931 1,168,592
Exports 568,582 369,023 502,754 553,334 442,075 160,453 166,588
Exports/production 18.6% 12.0% 14.9% 16.2% 13.2% 16.1% 14.3%

Brazil's vehicle sales

Sales 2,864,482 3,141,240 3,515,064 3,633,248 3,802,071 3,930,000
-3,970,000		 1,076,251 1,164,212
thereof: locally-manufactured 2,493,178 2,652,366 2,854,923 2,775,347 3,007,006 817,867 923,881
thereof: imported vehicles 371,304 488,874 660,141 857,901 795,065 258,384 240,331
Imported vehicles/sales 13.0% 15.6% 18.8% 23.6% 20.9% 24.0% 20.6%

Source: Brazil National Association of Motor Vehicle Manufacturers (ANFAVEA)
(Note) Vehicle sales represent the number of vehicle registrations. The figures for 2013 (Plan) are ANFAVEA's forecasts announced in January and maintained in April 2013.

 

 


Higher tax on imported vehicles and tax breaks for new car purchases

 In December 2011, the Brazilian government hiked industrial products tax (IPI) rate on imported vehicles to suppress a surge in imports, mainly from South Korea and China. Starting from 2013, Brazil's new automobile regime "INOVAR-AUTO" exempts the IPI tax increase for the OEMs that satisfy the requirements of localizing their production processes and investing in research and development, in turn helping to enhance domestic auto industry and R & D investment.

 On the other hand, facing the sluggish auto market since the end of 2011, the government of Brazil introduced the IPI tax breaks for new vehicle purchases in May 2012. The government has extended the tax breaks until the end of 2013 at the urging of the automobile industry.

Automobile industry policies by Brazilian government

Higher IPI tax rates on imported vehicles  The industrial products tax (IPI) rates were raised by 30 percentage points for imported cars and locally manufactured vehicles with less than 65% local procurement. The IPI rates which used to be 7 to 25% depending on the size of the engine displacement, were raised to 37 to 55%. The automakers that manufacture vehicles in Brazil with more than 65% local content are exempted from the IPI tax increase on imported cars.
 The policy was supposed to be valid for one year from December 2011, but was extended to the end of 2017 (April 2012).
New automobile regime "INOVAR-AUTO"  New automobile policy from 2013 to 2017 is called "Program of incentive to innovation and densification of the productive chain in the automobile industry (INOVAR-AUTO)" disclosed by the government in April and October 2012. The automakers are exempted from the higher IPI rate if they meet the following requirements at predetermined levels: localizing production processes, investing in R & D, investing in production engineering, and improving mileage. Those requirements will be intensified every year. (The OEMs which have already been producing vehicles in Brazil should also meet the requirements.)
 With the new automobile policy, the automakers that have existing plants and those which plan to build new facilities in Brazil are expected to invest around USD 22 billion for three years as well as to promote job creation.
Tax breaks for stimulating demand  Reduction of IPI tax on new vehicle purchases and financial operations tax on consumer loans
IPI tax rate  for vehicles with gasoline/flex engines of up to 1,000 cc: 7% →0%
for vehicles with flex engines of 1,000-2,000 cc: 11.0% →5.5%
for vehicles with gasoline engines of 1,000-2,000 cc: 13.0% →6.5%
Financial operations tax: 2.5% →1.5%
 The tax breaks were originally the temporary measure provided only from May to August 2012, but had been extended until the end of 2013 through four extensions (April 2013).

 

 


Brazil's vehicle sales by OEM

 In 2012, the top four OEMs, namely Fiat, VW, GM and Ford, accounted for around 70% of the total auto sales in Brazil, revealing their continued strength. Among Japanese OEMs, Nissan's sales rose by 55.8% over the previous year with brisk demand for the March and the Versa imported from Mexico, while Honda recovered from damages by the Great East Japan Earthquake and flood in Thailand, recording 45.3% sales increase y/y. Overall, Japanese OEMs' sales grew to constitute more than 10% of total sales. Meanwhile, sales of vehicles imported by the OEMs with no assembly line in Brazil fell by over 30% from last year. For the period between January and April 2013, Toyota and Hyundai, both of which had launched new compact models designed for Brazil in the latter half of 2012, doubled their sales.

Brazil's vehicle sales by OEM (all segments)
(Units)
2008 2009 2010 2011 2012 Jan.-Apr.
2012		 Jan.-Apr.
2013
Agrale 6,773 4,529 5,245 5,253 4,119 1,423 2,420
Mercedes-Benz 57,718 53,982 68,251 73,036 58,483 20,864 20,453
Fiat 665,614 736,969 760,495 754,275 838,218 227,048 248,421
Ford 296,833 325,504 363,990 344,382 345,467 104,698 105,007
GM 560,849 595,491 657,707 632,255 642,644 178,152 196,170
Honda 121,725 125,869 126,439 92,901 134,956 31,742 40,847
Hyundai 42,261 71,049 106,012 114,931 108,495 29,073 64,894
Iveco 11,957 10,587 15,925 20,585 16,669 6,279 4,996
Mitsubishi Motors 44,031 37,504 44,608 55,533 60,577 16,172 17,894
Renault-Nissan
thereof: Nissan
thereof: Renault 		131,067
15,704
115,363 		140,746
23,225
117,521 		196,173
35,874
160,299 		261,562
67,268
194,294 		346,353
104,780
241,573 		104,765
35,913
68,852 		89,067
25,178
63,889
PSA 152,803 151,159 174,383 175,862 146,656 42,980 39,324
Scania 8,831 9,097 16,298 14,878 12,115 3,487 6,577
Toyota 81,162 93,506 99,585 99,236 113,804 26,684 51,444
VW 586,549 686,408 700,621 703,863 773,358 212,056 217,697
MAN-VW 44,974 41,068 52,804 61,954 49,459 17,566 16,764
Volvo Truck 10,493 9,007 15,876 20,419 17,565 5,291 6,437
International 48 391 580 177 221
Mahindra 522 359 143 209
DAF 8
Sub-total (Note 1) 2,823,640 3,092,475 3,404,460 3,431,838 3,669,877 1,028,600 1,128,850
Others (Note 2) 40,842 54,430 110,604 201,410 132,194 47,651 35,362
Total 2,864,482 3,146,905 3,515,064 3,633,248 3,802,071 1,076,251 1,164,212
Source: Brazil National Association of Motor Vehicle Manufacturers (ANFAVEA)
(Note) 1. Vehicle sales represent each OEM's registrations of all vehicles including mid-sized and large commercial vehicles as well as the imports. The figures for 2009, however, are the total of registrations of passenger cars and LCVs and wholesale units of mid-sized and large commercial vehicles.
2. OEMs included in "Sub-total" are ANFAVEA's members which have production facilities in Brazil.
3. "Others" represent vehicles imported and sold by non-members of ANFAVEA, which do not produce vehicles in Brazil. Sales by Suzuki, Korea-based Kia, China-based Chery Automobile and JAC are included here.
4. Medium-/heavy-duty trucks and buses accounted for 81% of Mercedes-Benz's 2012 sales.

 

 


New model launch in Brazil

 In 2012 and 2013, a number of new models launched in Brazil were those developed and designed in Brazil exclusively for the market as well as the Brazilian versions of global models. Some of them were developed, taking Brazilian specific needs into account including rough roads, high-speed driving, and flex-fuel engines.

New models launched in Brazil by major OEMs (2012-2013)

OEM Model Outline
GM Chevrolet Spin  The Spin is a five-/seven-seater compact MPV launched in July 2012. It is a global model developed in Brazil. The model comes with a 1.8-liter Econo Flex engine mated with a five-speed manual/six-speed automatic transmission and has been produced at the Sao Caetano do Sul plant. It also has been manufactured in Indonesia since January 2013. The base model is priced at 44,990 reals .
Chevrolet Onix  The Onix is a compact hatchback developed in Brazil and launched in October 2012. The model offers a five-speed manual/six-speed automatic transmission and a 1.0-/1.4-liter engine which runs on 100% ethanol or a flex fuel mixture of gasoline and ethanol. It features the Chevrolet MyLink, onboard infotainment system, for the first time in its segment. The Onix has been produced at the Gravatai plant. The base model is priced at 30,990 reals.
Chevrolet Prisma  The Prisma is an Onix-based compact sedan launched in February 2013. The model features the largest interior space for its segment with a trunk volume of 500 liters. It comes with a 1.0-/1.4-liter engine which uses 100% ethanol or a flex fuel mixture of gasoline and ethanol mated with a five-speed manual transmission. The Prisma has been manufactured at the Gravatai plant. The base model is priced at 34,990 reals.
Ford New EcoSport  The new EcoSport is a compact SUV developed in Brazil and launched in September 2012. While the first-generation model was designed exclusively for South America, this all-new second-generation EcoSport is a global strategic model built on Ford's global B-segment platform. The model will be distributed in the emerging markets including South America, China and India as well as in the European markets. It has been produced at the Camacari plant. The base model is priced at 53,490 reals.
PSA Peugeot 208  The Brazilian version of the 208 was launched in April 2013. PSA Group's Brazilian R&D department has adapted the vehicle to local driving conditions. The model is fitted with a 1.5-/1.6-liter flex-fuel engine and has been produced at the Porto Real plant. The 208 has already been produced at Group plants in France and Slovakia since 2012. The base model is priced at 39,990 reals.
Hyundai Motor HB20  The HB20 is a compact hatchback launched in October 2012. It is Hyundai's first Brazil-exclusive, flex-fuel model developed in Brazil. The name "HB" stands for Hyundai Brazil, while the number "20" is the company's characterization for vehicles in the B-segment. The model comes with a 1.0-/1.6-liter flex-fuel engine mated with a five-speed manual/four-speed automatic transmission. The base model is priced at 33,295 reals.
HB20X  The HB20X is an HB20-based Brazil-exclusive crossover model released at the beginning of 2013. The model is equipped with a 1.6-liter flex-fuel engine. The base model is priced at 48,755 reals.
HB20S  The HB20S is an HB20-based Brazil-exclusive sedan launched in April 2013. The model is fitted with a 1.0-/1.6-liter flex-fuel engine. The base model is priced at 38,995 reals.
Toyota Etios  The Etios is a strategic compact for Brazil launched in September 2012. The model comes with a 1.3-/1.5-liter flex-fuel engine. Toyota has targeted annual sales of 70,000 units. The starting price is set at 29,900 reals for a hatchback version and 36,190 reals for a sedan version.
Honda Fit twist  The Fit twist is a Fit-based crossover launched in November 2012. It is Honda's first model developed by the Brazilian automobile R&D division exclusively for the local market. While maintaining convenience and comfort of the Fit, the new derivative wears a bold and sportier design by adopting a specially-designed front grill, roof rails and seat surface material. The base model is priced at 57,990 reals.

 

 


Top 4 OEMs: Fiat, VW, GM and Ford

Fiat Group to invest 15 billion reals in Brazil from 2013 through 2016

 In May 2013, Fiat Group announced a plan to invest 15 billion reals in Brazil from 2013 through 2016. The outlays will fund group-wide operations including expansion of Fiat's car plants and enhancement of Iveco's truck production and Magneti Marelli's automotive parts and service businesses. Fiat's investment is expected to create about 7,700 jobs directly and 12,000 jobs indirectly in Brazil.

(Note) 1 Brazilian real = JPY 46.9 (as of early June 2013)

VW to make an investment of 3.4 billion euros in Brazil through 2016

 In October 2012, VW disclosed a plan to invest 3.4 billion euros in Brazil during the period until 2016 since the country should be a cornerstone of VW's "Strategy 2018." The fund will be spent to develop its new models and technologies, expanding its manufacturing capacities, and building a hydroelectric power plant.
 Of the investment, 157 million euros will be used for the Taubate plant to introduce a state-of-the-art painting process, resulting in energy savings of 30% per unit and reduction of water consumption by more than 20%. The Taubate plant is building 1,300 units of the Gol, a hatchback, and the Voyage, a Gol-based four-door sedan, per day.
 126 million euros will be invested in the Sao Carlos engine plant to expand its daily production capacity from 3,800 units to 4,800 units. The EA111 flex-fuel engine and engines featuring the latest technology will be made on a new production line.

GM invests USD 1 billion in developing new model Onix and increasing production capacity

 In 2012, GM invested USD 1 billion in development of the new small car Onix family and expansion of capacity from 230,000 to 380,000 vehicles per year at the Gravatai plant. An additional USD 172 million was invested to build a new engine and cylinder head plant at Joinville. Production has started there in January 2013.

(Note) In July 2012, GM announced that it would close the inefficient vehicle assembly sector at the Sao Jose dos Campos plant. While the automaker had originally planned to cut 1,840 workers (of the workforce at the plant numbering 7,500), it has been facing difficulty in reaching agreement with the union.

Ford starts production of the global model Fiesta in Brazil

Starts production of the Fiesta  Ford revealed the Brazilian -made new Fiesta compact in March 2013. It is the first global car to be produced at its Sao Bernardo do Campo plant. The model is equipped with a 1.6-liter flex-fuel engine TiVCT Sigma and a 6-speed dual-clutch automatic transmission. Ford introduced new manufacturing technology and world-class quality controls into the plant to prepare for the Fiesta's production.
Enters extra heavy segment  Ford presented a new truck with capacity of up to 56 tons in January 2013. It is a globa strategic truck which was jointly developed by Ford's design and engineering teams in Brazil and Turkey. The automaker has offered 12 models with capacities between 6 and 46 tons in Brazil. With the new truck, it is entering the extra heavy-duty segment, which is the quickest growing class, to expand its sales. The extra heavy-duty model is built at the Sao Bernardo do Campo plant in Brazil and at the Inonu plant of Ford Otosan in Turkey.

 

 


Other European OEMs: Renault, PSA and BMW

Renault expands vehicle/engine production capacities at Curitiba plant

 In August 2012, Renault announced a plan to increase engine production capacity at the Curitiba plant by 25% to 500,000 units/year by the end of 2013. The surface area of the plant will be expanded by 5,000 square meters to boost output.
 In April 2013, Renault increased annual vehicle production capacity at the Curitiba plant from 280,000 to 380,000 units. Due to the shut-down at the Curitiba plant for five weeks for its expansion, Renault's vehicle sales in Brazil for the first quarter of 2013 declined, ahead of an expected recovery in the second quarter. (Nissan's vehicles including the Livina are also manufactured at the Curitiba plant.) Renault aims to boost its market share to 8% by 2016 (6.4% in 2012).

PSA increases capacity at Porto Real plant to produce Peugeot 208

 In January 2013, PSA launched series production of the Peugeot 208, a compact hatchback, in Brazil. The Group invested more than 305 million euros to develop the Peugeot 208 for Brazil and to prepare and expand the Porto Real plant, lifting annual production capacity from 150,000 to 200,000 units.

BMW to build its first Latin American plant in Brazil

 In October 2012, BMW revealed a plan to build its first Latin American assembly plant in Brazil. The automaker will invest around 200 million euros to set up a new plant in Joinville, Santa Catarina state with an annual capacity of 30,000 units. Production is scheduled to start in 2014. According to the media reports, BMW's premium sedan may be manufactured. BMW has had an import and sales company in Brazil since 1995 and sold 15,214 vehicles in 2011, up 54% y/y. As the Brazilian market is expected to grow in the future, BMW decided to have a production facility in the country.

 

 


Korean and Chinese OEMs: Hyundai Motor, JAC, Chery, Beiqi Foton, Hafei, Changan and Shaanxi

Hyundai Motor producing Brazil-exclusive HB family at new plant

 Hyundai Motor invested USD 700 million to build its first Brazilian plant in Piracicaba, Sao Paulo state, and held an opening ceremony in November 2012. The plant has a manufacturing capacity of 150,000 units a year. Production of the HB20 began in September 2012, followed by the HB20X and HB20S to be added in 2013. The Korean automaker anticipates that its sales in Brazil will reach 200,000 units for 2013.

Chinese OEMs

Anhui Jianghuai Automobile (JAC)  JAC plans to invest 900 million reals to build a joint venture plant in Camacari, Bahia state in northeastern Brazil with the local SNS (a wholly owned subsidiary of the Brazilian import agent SHC). JAC will provide 34% of the capital, with the rest 66% coming from the SNS. Construction began in November 2012 with a plan to start operations in 2015. The new plant is expected to produce 100,000 units of passenger cars and trucks annually.
Chery Automobile  Chery Automobile is now constructing a CKD plant in Jacarei, Sao Paulo State with an investment of USD 400 million. The plant will be completed by the end of 2013 and start production in the first quarter of 2014. Initially it has an annual production capacity of 50,000 units, which will be raised up to 150,000 units. In March 2012, the automaker also revealed a plan to build a supplier park near the Jacarei plant.
Beiqi Foton Motor  In September 2012, the state government of Bahia disclosed a plan that Beiqi Foton Motor would invest USD 300 million to build a plant in Camacari, Bahia state. The plant on a site of 1 million square meters is scheduled to start operations at the end of 2013 and to have a capacity of 30,000 units/year by 2017. The Chinese manufacturer reportedly plans to produce two commercial vehicles including a light truck and a minivan.
Hafei Motor  In August 2012, Hafei Motor under Changan Automobile Group granted the right and technology to produce, assemble and distribute Hafei Minyi minivan series in Brazil to CN Auto, a local car importer. CN Auto plans to set up a production line in Espirito Santo state with its own capital. The plant will be constructed on a site of 1 million square meters starting in 2013. It is scheduled to begin operations in 2014 with an annual production capacity of 50,000 units.
Changan Automobile  Changan Automobile and the governor of Goias state reportedly signed an agreement on construction of a vehicle plant in Anapolis, Goias state in May 2012. Changan will invest 150 million reals and start production in the first half of 2014. Initially it is planned to produce 50,000 units/year, which will be increased to 80,000-120,000 units/year.
Shaanxi  Shacman  In May 2013, Shaanxi, a Chinese commercial vehicle manufacturer, and Metro-Shacman, its Brazilian subsidiary to import and sell Shacman trucks, announced a plan to jointly construct a plant to produce heavy-duty trucks in Brazil. With an investment of 400 million reals, the companies will build a plant in Tatui, Sao Paulo state and start production in mid-2014 with an annual production capacity of 10,000 units.

 

 


Japanese OEMs: Toyota, Nissan and Honda

Toyota enters Brazilian compact car market by launching Etios strategic vehicle for Brazil

Recent moves  Toyota had been marketing its upper segment models including the Corolla, Hilux and SW4 in Brazil. The automaker entered the compact car segment which constitutes 60% of the Brazilian market, by launching the Etios in September 2012. Toyota aims to double its sales to 200,000 units for 2013.
Completion of Sorocaba plant  Toyota invested USD 600 million to build a second assembly plant in Sorocaba, Sao Paulo state. The company started production of the Etios, a strategic compact car, in September 2012 with an initial capacity of 70,000 units/year. The Sorocaba plant has been operating on a two-shift system since January 2013.
Construction of a new engine plant  In August 2012, Toyota revealed a plan to build a new engine plant in Porto Feliz, Sao Paulo state. There are plans for the plant to produce 1.3-/1.5-liter engines for the Etios and 1.8-/2.0-liter engines for the Corolla. Both models' local procurement ratio is expected to rise from 65% to 85% by locally manufacturing their engines. Production is scheduled to start in the second half of 2015 with an annual capacity of approximately 200,000 units.

Nissan to produce March at new plant starting in 2014

Recent moves  Nissan's vehicle sales in Brazil for 2012 soared by 55.8% y/y to 105,000 units with a high demand for the March and the Versa imported from Mexico. The automaker aims to have a market share of 5% in 2016 (2.8% in 2012).
Construction of  a new plant  Nissan invested 2.6 billion reals to build a new plant in Resende, Rio de Janeiro state. The new plant is scheduled to start production of V-platform-based vehicles at the beginning of 2014. The March, a compact hatchback, will be manufactured first, followed by the Versa, a compact sedan, one year later. The Resende plant is planned to have an annual capacity of 200,000 units.
Infiniti brand to be launched  Nissan plans to market the Infiniti premium brand vehicles in Brazil starting in the third quarter of 2014 (announced in November 2012). The company will open two official dealers dubbed Infiniti Centers, in Sao Paulo and Rio de Janeiro, to market the FX and JX crossovers as well as a new model of sports sedan to be launched in the near future.

Honda enhancing R & D capability in Brazil

Enhancing R&D function  In October 2012, Honda revealed a plan to invest 100 million reals to strengthen its local development function for the next two years until 2014. The automaker is scheduled to build a new R & D facility by the end of 2013 and increase the number of personnel to several hundreds. This move is a part of Honda's initiative to reform its global operations in which all six regions of the world will participate in product development concurrently. The company intends to develop new models that meet the needs of the customers in Brazil and that adopt more locally sourced parts.
New model launch plan  Starting from 2014, Honda plans to renew its lineup of small cars including the Fit and the City and to introduce a new compact SUV in Brazil. Honda's premium brand, Acura, will also be launched in the country in 2015.

 

 


Argentina: auto production for first 4 months of 2013 grows thanks to rising exports to Brazil

 In Argentina, 2012 vehicle sales dropped 6.0% from the year before to 830,000 units while production fell to 764,000 units, down 7.8% y/y. Total sales decreased as imported vehicle sales significantly declined due to the government's import restriction policies. A fall in production should be attributable to late deliveries of the parts owing to the import restrictions and vehicle sales downturn for the first half of 2013 in Brazil, Argentina's top export destination. For the period from January to April in 2013, Argentine auto production grew over the same period last year due to the recovery in exports to Brazil. Meanwhile, domestic sales for the period also exceeded the previous year's level.

 The Argentine government has implemented protectionist measures in recent years. In February 2012, the government introduced a new import restriction rule to ensure favorable balance of trade. In response to the surge in imported cars from Mexico, the Argentine government cut the value of tariff-free imports from Mexico to Argentina for three years from 2013.

Argentina's vehicle production and exports
(Units)
2008 2009 2010 2011 2012 Jan.-Apr.
2012		 Jan.-Apr.
2013
Production 597,086 512,924 716,540 828,771 764,495 218,609 251,499
Exports 351,092 322,495 447,953 506,715 413,472 114,937 131,296
Exports/production 58.8% 62.9% 62.5% 61.1% 54.1% 52.6% 52.2%

(Note) Of the 2012 exports, 340,165 units (82.3%) were for Brazil.

Argentina's vehicle sales

Sales 611,770 487,142 698,404 883,350 830,058 260,615 288,484
thereof: locally-manufactured 238,465 198,732 262,532 324,795 347,997 99,455 114,137
thereof: imported vehicles 373,305 288,410 435,872 558,555 482,061 161,160 174,347
Imported vehicles/sales 61.0% 59.2% 62.4% 63.2% 58.1% 61.8% 60.4%

Source: Argentine Automobile Manufacturers Association (ADEFA)

 

Argentine government introduces import restrictions to have trade surplus and cuts value of imported cars from Mexico

Import restriction policies  In February 2012, the Argentine government introduced a new preliminary screening regulation for import. All companies who plan to import merchandise into Argentina must file a Sworn Affidavit of Intention to Import with the Argentine Authority to gain approval to import. The licensing processes are said to be unclear and often take a long time, leading to late deliveries of the imports.
Auto trade pact with Mexico  As is the case with Brazil and Mexico, Argentina and Mexico concluded the Economic Complementation Agreement (ACE) 55 in 2002, which exempted import duties for vehicles and auto parts. Facing the surge in imported cars from Mexico which suppress domestic auto industry in recent years, the Argentine government requested to set new trade guidelines with Mexico in March 2012. As Mexico refused to renegotiate with Argentina, the South American country announced that it would unilaterally revoke the ACE55 for three years and pulled out of the pact in June.
 In December 2012, the Argentine and Mexican governments announced that they signed a new auto trade pact. Under the new three-year accord between 2013 and 2015, Argentina will buy up to USD 600 million of Mexican cars tariff-free per year. The new deal reduces the value of imported cars from Mexico by about 33% from 2011. The OEMs that are importing vehicles produced in Mexico gave a favorable reception to the new pact since they had to pay duties for all imported cars while the pact had been revoked.

 

Argentina's vehicle sales by OEM
(Units)
2008 2009 2010 2011 2012 Jan.-Apr.
2012		 Jan.-Apr.
2013
Fiat 65,605 47,902 69,145 92,127 79,093 30,621 37,833
Ford 78,460 65,598 85,518 106,691 105,192 32,770 39,694
GM 96,634 78,078 112,213 146,814 131,521 38,094 36,924
Iveco 4,699 2,272 5,011 7,122 6,569 1,557 1,957
Mercedes-Benz 15,049 9,321 14,366 15,621 16,194 3,960 5,611
PSA 77,732 64,725 87,124 112,790 113,886 29,824 42,555
Renault 74,591 64,372 97,369 124,162 124,289 37,272 33,933
Scania 1,723 716 1,702 2,962 1,978 539 754
Toyota 31,837 27,913 33,012 36,197 49,301 16,557 16,260
VW 125,370 96,045 145,869 195,020 159,133 55,421 57,521
Honda 15,990 15,962 4,690 3,992
Sub-total 571,700 456,942 651,329 855,496 803,118 251,305 277,034
Others 40,070 30,200 47,075 27,854 26,940 9,310 11,450
Total 611,770 487,142 698,404 883,350 830,058 260,615 288,484
Source: Argentine Automobile Manufacturers Association (ADEFA)
(Note) 1. OEMs included in "sub-total" are members of ADEFA, which have production facilities in Argentina. Sales include each OEM's imported cars.
2. "Others" include vehicles imported and sold by non-members of ADEFA, which do not produce vehicles in Argentina. Since Honda did not produce vehicles in Argentina before 2010, its sales are included in "Others."
3. Nissan's sales are included in Renault's sales. According to the MarkLines Data Center, Nissan's sales for 2012 and the period between January and April 2013 are 4,095 and 1,783 units, respectively.

 

GM to expand Rosario plant to build new global Chevrolet vehicle

 In October 2012, GM revealed a plan to invest USD 450 million between 2013 and 2015 to expand its Rosario plant to build an all-new global Chevrolet vehicle. The expansion of the plant will allow GM to add new vehicles for export and to refresh the Chevrolet vehicle portfolio for Argentina. The Rosario plant is currently manufacturing the Chevrolet models including the Agile, Classic and Corsa.

Honda exporting the City from Argentina to Brazil

 Honda has started exporting the City built in Argentina to Brazil in July 2012. It is the first time for the automaker to export the Argentine-made cars. While the City has also been produced in Brazil, a high demand there prompted Honda to import the vehicles from Argentina. In 2012, 6,500 units of the City FFV (flex-fuel vehicles) manufactured in Argentina were exported to Brazil.

 

 


Production Forecast by LMC Automotive: Brazilian light vehicle production forecast by make

(LMC Automotive、May 2013)

 According to LMC Automotive's forecast delivered in April 2013, Brazil's light vehicle production is projected to reach over 3.4 million units in 2013, an increase of 8% compared to 2012(excluding mid-size, large commercial vehicles). Brazil's economy should see positive growth starting in the second half of 2013 in preparation for the Soccer World cup in 2014. In the run-up to the highly anticipated 2016 Olympic Games in Rio de Janeiro, LMC Automotive expects over 4.0 million vehicles to be assembled in 2015 and 4.3 million in 2016.

Brazilian light vehicle production forecast by make (LMC Automotive)
(Units)
Sales Group Global Make 2010 2011 2012 2013 2014 2015 2016
Total 3,155,049 3,123,907 3,175,391 3,443,841 3,667,728 4,007,039 4,254,450
BMW Group BMW 0 0 0 0 3,845 29,796 32,759
Changan
Automobile Group		 Effa 0 0 200 1,149 5,557 7,965 8,138
Hafei 0 0 300 1,149 8,973 10,823 10,998
Changan Automobile Group Sub-total 0 0 500 2,298 14,530 18,788 19,136
Chery Group Chery 0 0 0 0 26,021 74,533 79,109
Karry 0 0 0 1,209 14,702 18,390 18,727
Chery Group Sub-total 0 0 0 1,209 40,723 92,923 97,836
Daimler Group Mercedes-Benz 12,260 0 0 0 0 0 0
Fiat Industrial Iveco 6,772 5,365 6,952 7,801 8,400 8,296 8,577
Fiat-Chrysler
Group		 Fiat 757,459 762,181 763,105 810,140 745,261 851,210 920,860
Jeep 0 0 0 0 0 1,591 23,994
Fiat-Chrysler Group Sub-total 757,459 762,181 763,105 810,140 745,261 852,801 944,854
Ford Group Ford 322,306 286,850 348,851 339,789 331,736 335,602 375,876
General Motors Group Chevrolet/Daewoo 637,932 622,385 585,480 630,541 628,858 604,783 634,060
Honda Group Honda 131,455 85,545 92,622 126,352 135,644 144,700 158,268
Hyundai Group Hyundai 23,711 38,635 44,779 179,899 186,934 221,696 235,525
Jianghuai Automotive JAC 0 0 0 0 1,167 21,160 25,420
Mitsubishi Motors Mitsubishi 37,555 38,717 41,339 48,342 74,727 80,541 84,584
Other Agrale 319 15 189 227 290 301 284
Other Chinese
Manufacturers		 Lifan 0 0 0 0 2,752 6,460 7,044
PSA Group Citroen 67,492 88,022 70,893 63,503 79,232 87,172 94,322
Peugeot 80,608 57,421 33,297 69,989 112,157 121,371 105,342
PSA Group Sub-total 148,100 145,443 104,190 133,492 191,389 208,543 199,664
Renault-Nissan Group Dacia 150,558 193,953 217,371 226,949 208,226 230,338 237,751
Nissan 18,155 32,640 28,813 32,934 80,665 110,070 118,262
Renault 21,897 23,279 33,459 14,019 12,660 27,209 29,576
Renault-Nissan Group Sub-total 190,610 249,872 279,643 273,902 301,551 367,617 385,589
Suzuki Group Suzuki 0 0 0 8,188 8,471 8,153 8,573
Toyota Group Toyota 63,729 60,456 64,786 101,925 108,726 140,158 137,544
Volkswagen Group Audi 0 0 0 0 4,084 6,632 6,832
Volkswagen 822,841 828,443 842,955 779,736 878,640 858,089 892,025
Volkswagen Group Sub-total 822,841 828,443 842,955 779,736 882,724 864,721 898,857
Source：LMC Automotive "Global Automotive Production Forecast (May, 2013)"
(Note) 1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.
3. For more detailed information or inquiries of forecast data, please contact LMC Automotive.

<Automotive Industry Portal MarkLines>