Charles W. Thurston, Latin America Correspondent
Brazil may be starting to shake off the economic chill that permeated the country under the storm of corruption that culminated in the ousting of the last president. The
automotive sector is warming, moreso in exports than domestic sales, and leading a slight uptick in industrial performance.
Overall, the economy is predicted to expand by 1.3 percent this
year under new President Michel Temer, compared with a contraction of 6. 6 percent last year.
January through May statistics from the Associação
Nacional dos Fabricantes de Veículos Automotores (Anfavea),
the national automakers association, showed that auto assembly jumped 23 percent to 1.0 million vehicles, compared with
the year-earlier figure.
While a large driver in this growth is the export market, domestic consumption also rose in the five-month period. New vehicle licensing was up 25 percent to 196,000 vehicles during the
period, compared with the year-earlier figure, Anfavea reports.
Exports of both finished vehicles and parts are up. One exporter targeting new markets in the Middle-East/North African
region is parts company ZEN, based in Santa Catarina state,
which is targeting a 20 percent export increase by shipping to
Algeria, Morocco, Egypt and other countries in the region.
Despite the economic doldrums last year, strategic auto investment was on a rise. A survey by the Banco Central do Brasil
indicated that during the first seven months of 2016, foreign direct investment in the Brazilian auto industry was up 77 percent,
compared with the year earlier period. Among new investments
in the automotive sector, which is centered around Sao Paulo,
Volkswagen announced in November that it would invest $2.18
billion in Brazil by 2020.
Middle class spending may be part of the rise in auto consumption, and may bode well for a rise later this year for demand within the architectural paint segment. In March, Fabrice
Cambolive, the CEO of Renault Brasil, told economic magazine Valor Econômico, that he believed in a quick recovery
for the Brazilian market. His company is expanding its model
offerings to invest in what Cambolive said he believes to be
the biggest growth area in the Brazilian car industry, which is
sport utility vehicles, or SUVs. He was quoted as saying that
from 2014 to 2016, the market share for SUVs grew from six
percent to 15 percent. “This is something I have never seen in
another country,” Cambolive was quoted as saying.
Overall industrial production in Brazil also is improving,
but much more slowly, with a national rise of 0.6 percent in
April compared with March data, released in June by Instituto
Brasileiro de Geografia e Estatística (IBGE), the national statis-
tics bureau. On a state-by-state basis, the agency also reported
that April industrial production had risen by 1.2 percent over
March in the Santa Catarina area, while the Sao Paulo area
slipped by a mere 0.1 percent from the prior month.
This warming is good news for paint and coatings suppliers,
which have been waiting out the economic downturn for sever-
al years now. One new $9 million investment is by AkzoNobel,
which has opened a new performance coatings production facil-
ity in Santo André, Sao Paulo state. The company is moving and
expanding its Niterói, Rio de Janeiro state industrial and mari-
time operation to the new location. The larger facility will have
50 percent increased production capacity for large batch formula-
tion, the company says. A new distribution center also expands
shipping capacity by 50 percent. And an increase in automation
will improve production control and quality. CW
Brazil’s Auto Sector
Warming Under New President
“AkzoNobel has opened a new
$9 million performance coatings
facility in Santo André, Sao
Paulo state.”
