The Brazilian economy is forecast to have a relatively minor contraction in 2009 followed by a return to growth in 2010. This bodes well for long-term growth prospects in Brazil and should prevent the stagnation in production seen in the past downturn. Brazil remains the largest player in the South American market despite further investment in Argentina to develop its export base. For South America to continue to advance its place in the auto sphere, a strong Brazil will be necessary.
 
Brazil’s importance in the automotive sphere is led by its South American sales status. Throughout the forecast window, Brazil maintains at least a 74-percent level of total South American production.
 
The Brazilian auto market is a unique developing market; there is no 'home-grown' domestic automaker, and only a small number of vehicles sold feature fossil fuels. These factors combine to make Brazil one of the most dynamic and open markets to new manufacturers in the coming years. Among the developed automotive markets interested in ways of freeing themselves from a dependence on foreign oil for fuel, Brazil is a trailblazer.
 
In Brazil, 94 percent of cars sold are flexfuel-capable, with most of that fuel produced domestically. Additionally, more than 48 percent of vehicles sold have a 1.0 l or less engine displacement, which leads to less fuel needed per car.
 
While GM, Fiat, and VW continue to be the largest players in the Brazilian market, their sales figures for Brazil are only minor in relation to their global sales. Since Brazil has not yet been established as a cornerstone of profit for certain established automakers, room remains for others to enter the market and undercut the current leading players.
(Source: PwCAutomotiveInstitute South America Outlook: Brazil 2009 Q2)
 
For further information please contact PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, Mr Stephan Huber (stephan.huber@de.pwc.com).