São Paulo – The auto industry is living one of its best moments in the country. Domestic demand and easy credit have boosted new car sales and have generated benefits for the productive chain. In July, the sector employed 146,000 people directly. In the accumulated result for January to July this year, sales totalled 2.04 million cars and light commercial vehicles on the domestic market and grew 8.6% as against the figure in the same period in 2010. The National Association of Vehicle Manufacturers (Anfavea) forecast is for growth of 5% as against last year by the end of 2011.
But the good figures are not enough to make Anfavea president Cledorvino Belini completely pleased. In an interview to ANBA on Thursday (4), in São Paulo, he said that in the past, Brazil exported as much as 35% of production, whereas nowadays shipments abroad are no more than 13% of produce. Figures supplied by the Anfavea show that the sector trade balance is negative. In 2010, Brazil imported US$ 18.4 billion in cars, light commercial vehicles, buses, lorries and agricultural machinery, and exported US$ 12.8 billion. A large part of these imports are by carmakers, which bring vehicles from Mexico and the Mercosur, with tariff reductions. Belini said, however, that exports must grow and recalled that exchange rates are a challenge that even influences the price of products sold in the country. Read the interview below:
ANBA – Is the auto industry living its best moment in the country? Can that be said?
Cledorvino Belini – The auto industry is living a good moment, with an average of 14,500 vehicles [sold] a day. It is a good market. There is great competitiveness, as is natural in any market. However, what matters is that the volumes be significant. The growth [forecasted] for the year, of around 5% or more, is real, concrete for GDP expansion of around 4%.
You mentioned competitiveness. We are getting new companies, mainly Chinese, both imported and with factories. In some cases at competitive prices. Is this having an impact in the life of carmakers that have been here a long time?
Only time will tell, the evolution, the tendency. You must remember that each carmaker has a different strategy; each carmaker will use different policies. Undoubtedly, competition is what brings progress, so it is the good side. What we need is competitiveness to export more, and that is what we seek.
Regarding exports, Brazil has already exported many cars to countries in the Arab world. Are there plans to return to selling to them, returning to investing in the market?
Maybe some carmakers are working with that purpose, but I know nothing on the matter.
Are there specific difficulties regarding selling there?
No. The truth is the exchange situation, which currently greatly affects competition with regard to other global players.
Industry and trade usually mention the ‘Brazil cost’. High tax burden, infrastructure and logistics problems. Does this affect sector production and sales? If the burden was not so high, could these sales be greater than the 14,500 cars a day?
The 14,500 cars a day, now, are the average of the last three months and result in a car and light commercial vehicle market of around 3.4 million units and, including lorries and buses, around 3.58 million. It is a significant market. The truth is that 22% to 23% of this market is being supplied by imported products. It is stabilized. But we exported 35% [of production] six years ago, and now we sell only 12%, 13%. What we need is to increase the rhythm of Brazilian exports.
What could be done for that?
Measures like the ones the government is already taking [including reduction of the Industrialized Product Tax (IPI) to foster the development of new products]… and technological innovation and development may result in that.
Why do we pay more for a car here? Is it just tax or have carmakers discovered that Brazilian consumers are prepared to pay more for the product?
Brazilian consumers are as competitive as any other. It is a mature market and one that is very demanding. In truth, we are measuring different exchange parities. Using the McDonald’s index, published in The Economist [calculating the value of the Big Mac worldwide] we may see that whereas the sandwich costs US$ 9 here, in the United States it is US$ 5 – I am guesstimating the numbers – and it costs US$ 1.50 in China. It is the question of exchange parity. The Brazilian real has become very strong; depreciation of the dollar is resulting in an exchange difference as against the Brazilian real.
*Translated by Mark Ament
