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Brazil is a tough nut for Chinese carmakers

Chinese auto brands have suffered sales declines in Brazil for three straight years due to the country’s economic recession and fierce competition.

Chinese automakers entered Brazil five years ago and enjoyed booming sales during the first two years. However, the ongoing economic recession has made it difficult for Chinese brands to sustain the gains.

According to the Brazilian auto dealers association, Fenabrave, 185,000 vehicles were sold in October 2015, a decrease of 36.41 percent year-over-year. During the first 10 months last year, a little over two million cars were sold in the country, a 23.31 percent decrease on a yearly basis.

Table 1: Top 21 car, light commercial and light vehicle brands

Of the Chinese brands, only Chery and JAC were on the lists. But their sales volumes were far behind the leaders. Of the top 21, eight had sales over 100,000 units. General Motors, Fiat Automobiles, Volkswagen and Ford Motor each sold more than 200,000. There were more Chinese brands on the list of light commercial vehicles, but none of them had sales of more than 1,000 and none of them were in the top 10.

In terms of total light vehicle sales, Fiat, GM, Volkswagen and Ford stood at the top. Fiat sold more than 372,000 units which easily eclipsed Chery, the top Chinese automaker in Brazil, with total sales of only 4,704 units.

<Table 2: Top 50 car and light commercial vehicle models during the first 10 months in 2015>

Fenabrave’s sales data shows that small vehicles have dominated the Brazilian market. The most popular car model was the Fiat Palio which sold over 100,000 in the first 10 months. The second was the Chevrolet Onix, which was developed to cater to the Brazilian market. Although the Onix was behind the Palio, it is rapidly closing the gap. Third place went to Hyundai’s “made for Brazil” HB20 which came to the Brazilian market almost at the same time with the Onix. Its sales increased month by month, tightly following the Onix. The Ford Ka came in fourth. Although its performance was not as impressive as the top three, it did not fall behind too much.  The Volkswagen Gol, once the most popular car in Brazil for 20 consecutive years, was defeated by the Onix and the HB20, ranking only fifth. Sixth place went to Volkswagen Fox/Cross Fox. Although Volkswagen lost its top position, it still had two models in the top 10 list. The Fiat Uno was seventh. Once second only to the Gol its rank fell with the Gol as well. The eighth and ninth were respectively the Renault Sandero and the GM Prisma. The Sandero’s rank fluctuated a lot and the Prisma was in a similar position. But they never left the top 20 list. The Toyota Corolla sales were not affected much, with the sales of more than 55,000 securing a place on the top 10.

Two SUV models were on the top 20 best-selling model list, the Honda HR-V ranking on the 14th and the Renault Duster the 20th.

The Brazilian market also features the popularity of small pickups, which took all the top six best-selling light commercial vehicles on the list.

The current situation does not leave a lot of room for Chinese small vehicle models in Brazil. There is fierce competition in the small car segment with competing models specially designed for Brazilians. The Onix and HB20 prove to be very successful and in less than two years, their sales have climbed the rankings to second and third place.

Some Chinese automakers have been building factories in Brazil to better compete. Chery has already set up a large plant in Brazil. JAC is expected to build a plant in Brazil in 2016. These two factories would be the first major overseas assembly plants for Chinese automakers and they represent a significant commitment to the Brazilian market. But it remains to be seen whether Chery and JAC local production will help expand their market shares.

(Translated by Kun Xu, based on author’s article published on auto.sina.com.cn)

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