It was a national holiday in Brazil on October 12 and I went with my family to where my father was born, a small town where approximately 10,000 people live today. During the long weekend, my impression was that Chevrolet was the best seller in Brazil, but actually it falls behind Fiat and Volkswagen. However, I saw more of the Chevrolet Montana (a pick-up truck based on a passenger car, something that Brazil created decades ago) and the S-10 (the local name of the Colorado) than the Fiat Strada (Fiat does not have a competitor for the S-10), Volkswagen Saveiro and Amarok.
Source: GM Media Site
As the country enjoys economic growth, people buy more cars, even in places where there is not a single dealership. That is the main challenge to grow business in Brazil, the fifth largest country by area in the world. How do you sell in areas that are thousands of miles away from the main cities?
During a quick research on some OEM websites, it is easy to realize how unequal the dealer network is in Brazil and how the companies that have been there longer have an advantage. Volkswagen, for example, has 30 dealers in the city of Sao Paulo, Brazil's main city, and seven in Salvador, the third largest city in the country. In Bauru, the main city in the area where I was during the weekend, Volkswagen has one dealer while Fiat and Chevrolet have two.
Volvo has only 20 point of sales in the whole country, four of which are in Sao Paulo. Chery, which started selling cars in Brazil in 2010, has 11 dealers in Sao Paulo and just one in Salvador, where Honda sells through three different dealers.
Released in November 2011, the latest regional GDP data available is from 2009. In that year, the state that grew the most was Rondonia, located in the Northern region of the country. With a GDP growth of 7.3%, sales of light vehicles increased 26.2% between 2008 and 2009. However, this growth does not make Rondonia a major sales force in Brazil. It represented only 0.7% of total sales and 0.6% of the country’s GDP.
Meanwhile, the state of Sao Paulo, which had a share of 33.5% of the national GDP in 2009, registered more vehicles than the whole of Argentina last year. Traffic has become an issue and lanes here seem to be narrower every time that I return, as increasing purchase power allows customers to buy larger vehicles. Of course this scenario is a magnet to OEMs eager to take advantage of the 3.7 million light vehicles that Polk forecasts will be sold this year in Brazil.
Posted by Augusto Amorim, Lead Analyst – South America Forecasting, Polk (10.17.2012)