São Paulo – The Brazilian industry produced 1,212,075 motorcycles from January to November of this year, down 15% from a year ago, the Brazilian Association of Motorcycle, Moped, and Bicycle Manufacturers (Abraciclo) reported this Tuesday (8) in São Paulo. The association forecasts 1.27 million units will have been made by the end of 2015.
Output declined the most for lower displacement motorcycles, whose buyers have the least purchasing power and rely on financing to a greater extent in order to buy. Since Brazil is experiencing recession, demand is weaker and credit is scarcer.
In November alone, production was below both October 2015 and November 2014 levels, but retail sales increased in November from October. Abraciclo president Marcos Fermanian believes this is an indication that the end of the slump is drawing near. “Looking forward, we hope to keep up [the current numbers] and even see some growth in the second half of 2016,” he said.
Abraciclo expects production, wholesale and retail sales to go up next year. Production is believed to reach 1.28 million units, wholesale is expected to reach 1.22 million motorcycles, up from 1.21 million this year; and retail sales should amount to 1.26 million, up from 1.255 million this year. “We hope the knot in the economy will be untied quickly,” the executive said.
In case the recession persists, he said job losses in the industry are a possibility, but remarked that there are no forecasts from manufacturers as a whole regarding eventual job cuts. Motorcycle manufacturers operating out of Amazonas state industry hub Polo Industrial de Manaus (PIM), where the bulk of Brazilian production comes from, currently employ 16,400 people.
Exports
Year-to-date through November, 63,179 units were exported from Brazil, down 23% from a year ago. In November alone, however, exports soared 87.7% from November 2014 to 6,298 motorcycles.
“In the past two or three months, there was some recovery compared with early on in the year,” Fermanian said regarding Argentina, the top foreign buyer of Brazilian motorcycles and the primary culprit for the decline in foreign sales in 2015. Exports to other major destinations, like the United States, Colombia, Australia and Canada, remained virtually flat or even increased, in the case of Colombia.
Abraciclo expects exports to reach 73,000 units by the end of 2015 and then increase to 75,000 in 2016. Fermanian believes the new administration in Argentina, whose new president will take office on the 10th, will pave the way to “strong integration” with Brazil. Out goes president Cristina Kirchner, who’s more leftist and protectionist when it comes to trade, and in comes Mauricio Macri, who’s more right-wing and theoretically more of a liberal.
According to Fermanian, the South American market as a whole is huge, but primarily supplied by Asian manufacturers. “There is a vast potential for progress with our neighbors,” he said.
He remarked, however, that in spite of the US dollar hike relative to Brazil’s real, which makes Brazilian products cheaper abroad, and of tax breaks offered to companies at Zona Franca de Manaus, there are other factors preventing Brazilian manufacturers from becoming more competitive abroad, including red tape, poor logistics and the lack of trade agreements between Brazil and other countries.
Fermanian stressed, however, that Brazilian manufacturers are able to meet an eventual increase in foreign demand swiftly. He noted that the Brazilian industry produced over 2 million motorcycles in 2011, so the capacity to increase production is there if needed.
“Whatever reaction we get a sense of from whatever country, the exporting companies can easily rise to the occasion,” he said. “That would be a very welcome surprise, and a way of minimizing the [weak performance] of the domestic market,” he concluded.
Abraciclo’s member companies are BMW, Bramont, Dafra, Harley-Davidson, Honda, Kawasaki, Suzuki, Traxx, Triumph and Yamaha.
*Translated by Gabriel Pomerancblum
