Inside Brazil: The Leading Auto Manufacturers and Suppliers Augusto Amorim
Brazil Beyond Soccer and Carnival World Soccer Cup winner five times World s most popular Carnival World s 6th largest light vehicle producer World s 4 th largest light vehicle market 2012 R. L. Polk & Co. All rights reserved. 2
Brazil to Remain Larger than Europe 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Brazil France Germany United Kingdom Italy Spain Source: Polk 2012 R. L. Polk & Co. All rights reserved. 3
Global Car Demand in 1,000s 120,000 2000 2010: +25% 2010 2020: +55% 100,000 2010: 70.6m +12.5% 2011: 72.8m +3.0% 2012: 77.7m +6.7% 80,000 60,000 2000 2010: +131% 2010 2020: +83% 40,000 20,000 2000 2010: -16% 2010 2020: +24% 72% 48% 38% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 TOP 10 in 2000 "New" markets World Source: Polk 2012 R. L. Polk & Co. All rights reserved. 4
New Registration Development 70 ø2000-2005, ø2005-2010, ø2010-2015, ø2015-2020 New registrations per 1,000 inhabitants 60 50 40 30 20 10 0 BRAZIL CHINA FRANCE GERMANY INDIA ITALY JAPAN RUSSIA UK USA 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 USA: Light Trucks Income per capita in US$ (ppp) Source: Polk 2012 R. L. Polk & Co. All rights reserved. 5
Current Car Density Is at 129 Units/1,000 Inhabitants 2021 7.8% 2011 48.2% 2001 13.0% 1991 14.9% 1981 109.4% 1971 0 100 200 300 400 500 600 India China Brazil USA Japan France Germany Source: Polk 2012 R. L. Polk & Co. All rights reserved. 6
Market Increased 150% in 10 Years North 227.7% Northeast 177.9% Brazil 146.2% Year Registrations 1993 1,071,568 2007 2,375,070 2009 3,074,307 2015 4,133,695 2020 5,148,565 Central-West 193.1% South 140.2% Southeast 129.1% São Paulo 113.6% 1,029,228 light vehicles Source: Polk and Renavam 2012 R. L. Polk & Co. All rights reserved. 7
Major Indicators Stabilized % GDP 9 Wages % 5 7 4 5 3 3 2 1 1-1 2008 2009 2010 2011 2012 2013 2014 2015 0 2009 2010 2011 2012 2013 2014 2015 Interest vs. Inflation Age % 12 10 Interest Inflation Millions 250 200 0-17 18-30 31-80+ 8 150 6 4 100 2 50 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2000 2005 2010 2015 2020 2025 2030 Source: Feri and IBGE 2012 R. L. Polk & Co. All rights reserved. 8
An Old Emerging Market Ford Production of T and TT started in 1919; 2,447 units sold in the first year General Motors Established in January 1925; production started in September Volkswagen CKD in 1953; first factory in 1957 Toyota Production in 1959 Fiat Production in 1976 2012 R. L. Polk & Co. All rights reserved. 9
The Big 4 Perceived as Brazilian Brands Gurgel Troller Agrale Production between 1975 and 1993 Volkswagen powertrain until 1987. Own engine from then on Fiberglass body 25% of production exported to 40 countries Bankruptcy in 1993 Production started in 1997 as RF Sport Name changed to T4 Failure of Pantanal pick-up truck Ford bought in 2007 for estimated US$ 220 million 19 dealerships 1,274 units in 2011 Founded in 1962 as a tractor producer Introduction of trucks in 1982 Motorcycles between 1983 and 2006 Marruá developed in 2005 for military and civil use 750 units sold until February 2012 2012 R. L. Polk & Co. All rights reserved. 10
Production in 17 Plants in 8 out of 27 States Ceará Bahia Goiás Minas Gerais Rio de Janeiro Paraná São Paulo Rio Grande do Sul 2012 R. L. Polk & Co. All rights reserved. 11
Production in 25 Plants in 8 out of 27 States Ceará Pernambuco Bahia Goiás Investments 2011: US$ 5 billion 1980-2011: US$ 47.3 billion 2012-2015: US$ 22 billion Source: Anfavea Paraná Minas Gerais Rio de Janeiro São Paulo Rio Grande do Sul 2012 R. L. Polk & Co. All rights reserved. 12
High International Presence Among Suppliers 500 suppliers 60% latent capacity 2012 R. L. Polk & Co. All rights reserved. 13
Design to Please the Local Customer Volkswagen 1966 Ford 1967 GM 1973 Fiat 1978 PSA Peugeot Citroën 2006 Renault 2008 Brazilian Focus: - Small cars - Off-road appearance - Mid-size and car-based pick-up trucks 2012 R. L. Polk & Co. All rights reserved. 14
Engineering Creations: Popular Car and Flex Fuel 80 70 60 50 40 30 20 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 100% 90% 80% 70% 60% Ethanol Flex Fuel 50% 40% 30% 20% 10% 0% 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Anfavea 2012 R. L. Polk & Co. All rights reserved. 15
Increased Competition from All Over the World 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1993 1998 2003 2008 2013 2018 2023 Big 4 France Japan South Korea China Germany Italy Great Britain United States Brazil Source: Polk 2012 R. L. Polk & Co. All rights reserved. 16
LV: Top 5 Makes Have 75% of the Market 2011 2012 2013 25 20 15 10 5 22.5% 20.2% 16.8% 8.5% 6.2% 0 Fiat VW Chevrolet Ford Renault Source: Polk 2012 R. L. Polk & Co. All rights reserved. 17
HV: Top 5 Makes Have 90% of the Market 35 2010 2011 30 25 20 15 10 5 - MAN Mercedes Ford Volvo Iveco Source: Anfavea 2012 R. L. Polk & Co. All rights reserved. 18
Nissan Was the Only Make to Grow in Q1 Total -7.8% Fiat 0.6% VW Chevrolet -13.8% -3.0% Ford 1.0% Renault -13.6% Nissan 93.8% Toyota Hyundai Honda Citroën -19.6% -26.0% -14.1% -39.7% Source: Polk 2012 R. L. Polk & Co. All rights reserved. 19
High Car Costs, High Car Prices Brazil USA 0-10,000 50,001-60,000 60,001+ 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10,001-15,000 15,001-20,000 Fiat Mille US$ 13,599 A/C + power windows + power steering = US$ 2,456 CD Player = US$ 181 NO airbag NO ABS Chery QQ US$ 14,086 A/C Airbag Power windows Power steering ABS CD player 40,001-50,000 20,001-30,000 Lamborghini Aventador US$ 376,698 30,001-40,000 US$ 1,547,290 Source: Polk 2012 R. L. Polk & Co. All rights reserved. 20
Brazil Imports More than Exports Make Exports Imports Trade Deficit Hyundai - 2,01 2,01 Toyota 703.7 1,74 1,04 Mitsubishi - 970.7 970.7 PSA 485.5 1,39 908.2 Honda 211.7 999.2 787.5 Nissan - 723.4 723.4 Renault 1,11 1,47 359.7 VW 1,95 2,24 290.2 Ford 1,54 1,82 278.9 Fiat 1,65 1,59 63.2 GM 1,86 936.4 920.9 Total 4,55 12,74 8,19 In US$ million Source: MDIC 2012 R. L. Polk & Co. All rights reserved. 21
Imports are Growing Despite Government Efforts 900,000 800,000 700,000 600,000 500,000 80,000 60,000 40,000 20,000-2010 2011 2012 Jan Feb Mar 400,000 300,000 200,000 100,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Anfavea 2012 R. L. Polk & Co. All rights reserved. 22
New Policies to Shape Future of the Industry Free trade agreement with Mexico reviewed US$ 1.45 billion between March 2012 and March 2013 US$ 1.56 billion between April 2013 and March 2014 US$ 1.64 billion between April 2014 and March 2015 New rules to pay less IPI between 2013 and 2017 Invest 0.15% of revenues in R&D; 0.5% from 2015 onwards Invest 0.5% of revenues in engineering and industrial technology; 1% from 2015 onwards 8 out of 12 production steps must happen in Brazil; 10 out of 12 from 2016 onwards 25% of the line-up must have fuel consumption tag; 100% from 2017 onwards Local content 55% for OEMs already producing in Brazil Newcomers have 3 years to reach same level 2012 R. L. Polk & Co. All rights reserved. 23
Thank you! Augusto Amorim Lead Analyst South America Forecasting 248.728.7436 augusto_amorim@polk.com For more information please visit: www.polk.com/forecast Any use of this material including reproduction, modification, distribution or republication without the prior written consent of R. L. Polk & Co. is strictly prohibited. 2012 R. L. Polk & Co. All rights reserved. 24