STRATEGY ANALYTICS: Will the Brazilian Auto Market Weather the Storm?

BOSTON--The Strategy Analytics report, “Brazil: A Safe Bet For Automotive Electronics In Tough Times,” reveals an 11.5 percent growth in demand for automotive electronics from the Brazilian auto industry. Car production is expected to grow in Brazil, compared with sharp downturns in the mature markets.

Brazil’s auto industry has received the benefits of a growing economy, consumer access to better credit facilities and a stable government. Major investments have been planned by global car makers and component suppliers to raise local production capacity in order to meet this growing market.

However, the Brazilian auto industry is now facing uncertainties. The currency flight to the US dollar has made imports of critical components more expensive. The credit crunch has made industrial investment and consumer credit more difficult to obtain. The declining global economy will have an adverse impact on car sales. As a result, certain investment projects have been postponed. Some OEMs have started to impose staff cutbacks and enforced leave.

According to the author of this report, Kevin Mak, Industry Analyst of the Strategy Analytics Automotive Electronics Service, “Mixed signals from the local market make it a hard call, but Brazil still has the potential to ride out this storm. Cutbacks in the automotive sector have been announced later than in other markets. The strong dollar will be the stimulus for increasing local component production, enhanced by a fledgling semiconductor industry. Production of light trucks and low-cost cars will ensure continuing growth for Brazilian car manufacturers.”

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