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Automotive Sectors of Latin America: Set for Major Recovery From 2000

9 December 1999

Automotive Sectors of Latin America: Set for Major Recovery From 2000

 According to the Latest Economist Intelligence Unit (EIU) Automotive Report,
         'The Automotive Sectors of Latin America: Prospects to 2004'

    -- Vehicle sales in Latin America in 2004 will show a 37% increase on 1998
       levels, reaching 4.28m units.
    -- Sales will drop in 1999 by 27% and will not exceed 1998 levels until
       2001.
    -- Vehicle production will increase by over 42% from 1998 to 2004,
       reaching 5.29m units.
    -- GM will remain the market leader throughout the forecast period, having
       overtaken Volkswagen for the first time in 1998. Fiat's 1998 share fell
       by over 3 percentage points to 15.1% and is set to fall further in the
       short term.
    -- Japanese and French manufacturers will see pronounced share gains
       throughout South America.
    -- Component suppliers will increase their investment in Brazil as OEMs
       seek to raise local content levels and reduce import costs.
    -- Argentina's role as a production base will come under pressure as OEMs
       rethink their strategies and investment plans.
    -- Assembly volumes in the Andean region will remain small, with OEM
       withdrawals expected as the crisis prompts Latin American
       rationalization.
    -- After $20bn invested by OEMs in South America from 1996-2000 future
       funding will ease, but further capacity will be added in Mexico.
    -- With many of the newest plants in the world, Brazil will become the
       global test-bed for new approaches to plant set-ups, manufacturing
       strategy and supplier relations.

    Brazil's economy has proved highly resilient, but consumers will remain
stubborn and vehicle sales could fall by as much as 29% in 1999.  With GDP
growth maintaining its momentum, Brazilian vehicle sales should surpass the
2m unit level by 2003.
    Brazil's South American neighbors, however, have been thrown into deep
recession through 1999. Argentina's 1999 vehicle sales will fall to their 1995
level, with little possibility of far exceeding the half million level
throughout the forecast period.  Venezuela and Colombia will face 1999 sales
slumps of over 40%.

    "The Automotive Sectors of Latin America: Prospects to 2004"
    Now available from the Economist Intelligence Unit on 212-554-0643 or by
e-mail at newyork@eiu.com.
    Price: US$ 1,095.00 / 745 pounds
    Pages: 314
    Visit the company at http://www.eiu.com