Great comeback in Brazil

Great comeback in Brazil

WHAT’S SPECIAL?

Half of all the new passenger car sales in South and Central America are sold in Brazil, the only market in the world where flex-fuel - a mix of petrol, and Ethanol derived from sugar cane - is the dominant fuel source accounting for nine-in-ten sales according to Anfavea data. The Portuguese speaking nation, home to 200 million residents, is a top ten global passenger car sales volume market according to OICA data, with over two million new passenger cars registered here last year. Belonging to the so-called BRIC (Brazil, Russia, India and China) group of “emerging markets”, coined by Jim O'Neill, chief economist at Goldman Sachs in 2001, Brazil is once again showing its huge market potential. After suffering a recession lasting half a decade, coinciding with the period in which it hosted the world’s largest sporting events, the Football World Cup in 2014 and the Summer Olympic Games two years later, the market returned to growth in 2017.

WHAT’S NEW?

As the market once again begins its upward ascent, aided by the ubiquitous global appetite for SUV/Crossovers - recording its highest Brazilian sales share last year, accounting for every fifth model sold - Volkswagen is in the process of taking full advantage, with its biggest launch offensive in the company’s history. Twenty new models will reach the Brazilian market by 2020, with investments totaling €2.026 billion, four of which will be SUV/Crossover models. Alongside the Mexican manufactured Tiguan Allspace introduced last year, the locally manufactured compact T-Cross, specially adapted for the Brazilian market, will join the line-up later this year. Launched in 2017, the New Polo (Novo Polo) based on the modern MQB (Modular Transverse Matrix) platform, on which the majority of Volkswagen’s European models are based, was the first model of the new strategy to launch, followed just 60 days later by the Virtus fastback small sedan, based on the same platform. Virtus, especially developed for the Brazilian market, not only finished its debut year as the top selling model in its sector, but in the process accounted for nearly every second car sold in the compact sedan sector.

WHO’S STRONG?

Volkswagen accounted for close on 15 percent of the Brazilian car market last year, gaining over two percentage points over the previous year, while accounting for almost all Volkswagen Group passenger cars sales, with Audi and Porsche making up the remainder. Both locally manufactured Audi models – A3 Sedan and Q3 SUV/Crossover – made up the majority of Audi sales last year while all Volkswagen models apart from the Passat were manufactured locally in Latin America. Volkswagen’s best-selling model last year remained its Gol with just under 80,000 units making it a top four selling model last year. Volkswagen are once again aiming to achieve similar successes as it achieved with the Gol, first launched in 1980, leading the top sellers list for 27 consecutive years, up until 2013.

WHAT’S NEXT?

Although electrified car sales remained low in Brazil last year, soaking up less than half a percent of total sales, heavy goods vehicles could well likely set the electric pace in this market which has one of the highest renewable energy mixes in the world. According to the IEA (International Energy Agency) almost 45 percent of primary energy demand is met by renewable energy, making Brazil’s energy sector one of the least carbon-intensive in the world. Having presented its e-truck last year, Volkswagen, which markets heavy trucks under the Volkswagen brand in Brazil, will soon begin rolling out its fully electric e-truck. The model is in the test phase and goes into production in Brazil next year.