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by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodmanmedia.com
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 in-
vestment in the Brazilian auto industry
was up 77 percent, compared with the
year earlier period. Among new invest-
ments in the automotive sector, which is
centered around Sao Paulo, Volkswagen
announced in November that it would in-
vest $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
several years now. One new $9 million
investment is by AkzoNobel, which has
opened a new performance coatings production facility in Santo André, Sao Paulo
state. The company is moving and expanding its Niterói, Rio de Janeiro state
industrial and maritime operation to the
new location. The larger facility will have
50 percent increased production capacity for large batch formulation, 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.”
