By on November 7, 2010

Walking, struggling, fighting through the São Paulo car show put me into a somber mood. I can’t help it. With a baby on the way, a new President of the country and seeing the cars I’m seeing, I can’t help but think about the future. I’m thinking the party is over. For most “domestic” car makers that is.

First off it’s a car show. But they make it awfully hard for car drivers! Traffic to get there is unbearable. Parking is inadequate and expensive. The show’s organizers do recommend getting there by public transportation, but I’d expect a modicum of car-friendliness! There is none. Paradoxes… Follow me …

After those hassles and obstacles you get there. The people running the show thump their chests and proclaim this is the biggest event ever! Most cars shown ever! Most visitors ever (650,000 visitors to the 2 week event)! The way they treat visitors though makes me wonder if I’m ever going through the pain again.

The venue where the show is held is São Paulo’s largest. The Anhembi Expositions Pavilion it’s called. São Paulo is (?) a world-class city so world-class accommodations would be de rigueur, right? Wrong. The venue’s shortcomings are as old as the building itself, bad location, bad parking, no air conditioning (or at least it feels like there’s no A/C), no control of how many people get in, price gouging on anything you eat or drink. The organizers claim that due to its size, the São Paulo show is on par with the Detroit, Paris, Frankfurt and Tokyo shows. I beg to differ. Though I haven’t been to any of those shows, I bet they are not held in what is essentially an old warehouse, albeit a very big warehouse.

Walking through the show is another misnomer. You have to push to get anywhere you want. Or you just let go and let the human tide take you where it may. You can’t really get close to most cars and a lot of the exhibitors make it almost impossible. I mean the objective of the show is to get close up and personal with the cars right? Well, Ferrari for one thinks otherwise. The models though are attractive. Plus we are Latin so there are no inhibitions on putting them in skimpy clothes. Take that as you wish.

But the cars you ask? That’s what got me thinking. Brazilian car taxes are crazy-stupid, but there has got to be another reason for these prices. Very healthy margins on steroids are probably it. This market is protected by very high import barriers. So the local makers are protected. Even the Chinese feel the need to build locally, which is probably good. The downside of this is that the local makers are free to charge crazy prices.

Brazilian consumers, though it’s slowly changing, are basically suckers. I mean we have the privilege of paying Fusion (American) prices for a Fiat Palio 1.4. Brazilians think it’s normal to pay around US$70,000 for a BMW 3. How about US$40,000 for a Corolla? Of course! Don’t you know? That’s an executive car! How about that Hyundai ix35 (no Sir, it’s not a Tucson! It’s a brand new car!)? For 50,000 bucks! It’s a steal if you ask the Hyundai people…and the Brazilian consumer concurs. Ferrari and such can be yours. Prepare that 500,000-dollar check! The Bugatti Veyron has finally found its way to our friendly shores. VW do Brasil will sell it to you for an Arabian-princely 7.7 million reais (no, I’m too depressed to do the math).

On the “real” side of the show, where more than 75 percent of buyers shop, the pickings are slim. Go over to Fiat. They’re showing off their new line. You can now buy a New Uno in “Sporting” drag. Sadly, that sums it up. Lipstick on the regular car. No mechanical changes. The new Uno also shows off a topless version. Don’t get too excited. It’s just for show I’m told. No way on earth it’ll make it to production. The rest of the line is there. No big changes. New e-Torq engines making all the line 5 to 10 percent more expensive. VW must be happy.

Oh wait, there’s the new Fiat Bravo! Bravo! 4 years after it debuted in Europe, it’s here! No, not the new facelifted version, the old one. Ahem! It won’t kill the Stilo, either. And it starts at US$33,000. Thanks, but no thanks.

On to VW. Nothing. Really, nothing. I mean there’s the Fox and Gol blue motion. No, no diesel. Only aerodynamic appendages and “eco” (skinny) tyres. Improves economy (in the real world) 5 percent, but the prices gets bumped some 10 percent. Losers. Oh, the new imported from Mexico decontended Jetta is here! The face is the same as the Fox’s! How (un)exciting!

Third place in the ranking of sales GM do Brasil is proud to present: The Camaro! It can be yours for almost 100,000 American dollars! Or alternatively you can buy one of their ho-hum, run-of-the-mill offerings and keep your fingers crossed. They’ll draw a Camaro at the end of the year. If you win…The downside is that you’d have to drive a Celta (1st generation Corsa), Classic (old Chinese Sail), Vectra (also known as Astra in Europe), S10 (yes the 1995 S10 lives on down here) – you get the picture. Embarrassing show. Does GM even care anymore? Twilight zone.

Ford. Better. Exhibits the Start concept. The Explorer America concept. Old concepts already shown elsewhere. The Start is smart though. However, I’m afraid much of what’s attractive will be lost in the translation into the production car. Anyway, I could see one in my future. As to real, saleable cars there’s the new Edge. For over 100,000 reais. And the new Ford Fiesta. For over 50,000 reais. Again, no thanks. For show there’s the Mustang GT 500. But just for show (and not to be outdone by Chevy and its Camaro).

The Japanese now. Next to their Brazilian line (Civic, Fit and City – a Fit in sedan guise for “lucky” 3rd World sucke…I mean, consumers), they show what we don’t/won’t get. There’s a Clarity, a CR-Z, and an Insight, plus an electric EV-N, which would interest me and could be sold here with a regular ICE engine. Would be a hit! Toyota also shows some concepts from other places we’ve already seen (how does an 8 year-old concept sound? When I heard it was 8 years old I didn’t even bother to write down the name) and their regular line. Nothing to see here, either. Mitsubishi is present, too. They launch some crossover car, too. Too expensive for most consumers and largely forgettable. I already forgot the car’s name.

Nissan is a different story. They show the March. Imported from Mexico, it’s supposed to transform Nissan into a real volume producer in Brazil. The design is ok, but the back end is weak. Inside there’s a big black empty space on the right side of the instrument cluster…Guess it’ll come down to price. My take, close but no cigar. But at least they’re trying. They’re also showing the Leaf (and not in that blue shade, either). Interesting.

The French! Almost forgot them. They basically show concepts and some cars we won’t/don’t get (like the sweet Peugeot RCZ). Some are pretty interesting, though old. In fact, at least, they’re trying, too. Peugeot is using the show to launch the 3008. Renault is launching their (ahem, Samsung) Fluence. It’s hoping this car will fare better than the old Megane sedan. Too derivative, too bland. Not enough to upset the Japanese leadership in this market segment.

The German lux makers? They’re here, too. Audi is launching a bunch of new stuff at the show and so is BMW. Mercedes is just showing concepts. Impressive. But their pricing in Brazil keep them away from the mass of consumers. Good to show us how humble our real cars are. Maybe one day we’ll get there. Hopefully, though, we’ll get there with some joy and color. Why are these cars and their presentation always so somber? Ain’t cars supposed to be fun?

Hyundai and Kia show they care for the show. They’re launching important and maybe game-changing (in limited market segments) cars. They’re sure to impress us impressionable Brazilians. They are getting greedy on pricing though. It’s no longer as attractive as it once was. Sigh! Guess they’re taking a leaf out of the other makers’ playbook down here. No game busters though. Small, compact Hyundais are still a way off. They’re promised for 2012. They may well rock the market.

Finally, a realization. Guess who is rocking the market? Right now? Making waves and shocking people? Ruffling feathers in Brasilia to the point people are talking about messing with the exchange rate (an almost universal lament from “Brazilian” makers and other industrialists) in order to “help” “local” makers? The Chinese. Yep, much like in that old horror movie (in a creepy, childish voice), they’re here!

It’s funny. You can see people who suspiciously look like they work for the competition all day at the Chinese makers’ stalls. Jotting down notes and observing people’s reaction. At the Lifan exhibit I could see and hear some Italian execs talking excitedly (and in loud whispers) about the cars. They were poking fun at the car, but were dismayed that they thought, as I did, too, that most of the buyers there were approving of Lifan’s Mini-look-alike 320. At the Chery stand, some German executives were also checking out the cars. Sorry, I can’t understand German so I didn’t even try to eavesdrop. They looked worried and rushed though.

How were people reacting? Chery, Lifan, Effa, JAC, Changhe, Haffei and others are there. Sometimes they weren’t mobbed like their more famous European, American or Japanese counterparts. But there were always people there. People however don’t march up to them like they do at other stands. I think it’s a little like going to some stranger’s house. At first we are shy. People are wary as they approach the cars. They are impressed though by the latest designs. You hear things like, “It looks European!” in admiring tones. You also hear, “What a rip-off!” People actually start debating with strangers if they’d buy one or not. And why. When prices are mentioned even the most hardcore, anti-Chinese guy raises his eyebrows and gets a pensive look. Then you start hearing phrases like, “Fiat and Volks are dead!” Or, “I’ll wait and see, maybe in a year or two”.

Out on the streets, and in the streets of my hometown, too, I suddenly start noticing all the Chinese cars. Used to be you’d go days without seeing one. Nowadays, you see one in almost every outing. Specially, work trucks and vans. However, more and more, private passenger cars, too. The Chery Face is becoming an alarmingly or pleasantly (depending on which side of the fence you’re on) common sight. I bet the QQ will be too. Much more so than the March mentioned before.

My final conclusion then is that we won’t be going Japanese as that old 80s song said. They missed. We’ll all be going Chinese though. With all the good and bad that could entail. Brave new world indeed.

Thanks to bestcars.com.br and msn.icarros.com.br for the pics. It’s almost impossible to get good shots with so many people pressing and jabbing at each other when up close to the cars. I guess in this aspect, at least in São Paulo, we’re already Chinese, packed too full!

<a href="http://video.msn.com/?mkt=pt-br&from=sp&fg=shareEmbed&vid=ee7a9a3f-cc22-4bc9-9666-fb60daad4544" target="_new" title="iCarrosTV: Os conceitos do Salão">Vídeo: iCarrosTV: Os conceitos do Salão</a>

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15 Comments on “Brazil’s Salão do Automóvel de São Paulo: Impressions...”


  • avatar
    John R

    Not too surprised by this. China and Brasil, if the Economist can be taken at its word, have a fairly rosy relationship.

  • avatar
    jcap

    Interesting.

    Looks like the Chinese have decided on Brasil as one of the first big export markets to conquer?

    Could you give us a idea what kind of price differences there are between Chinese and “domestic” brands. For example VW Fox vs. Cherry Face?

    How high is the import tax?

    Are the Chinese producing cars locally, if yes how are they able to charge lower prices?

    Are they importing knockdown kits and only do the final assembly locally in Brasil? http://en.wikipedia.org/wiki/Complete_knock_down

    • 0 avatar

      Hi jcap! Thanks for the interest.

      I agree, i think the Chinese will be big. Give them 5 years.

      Price differences range in anywhere from 5,000 to 10,000 to 15,000 reais depending on market segment (R$1,8=US$1). As to the segment you asked to get a VW Fox with the same level equipment you’d have to spend R$42,000 (the Face will cost R$31,000). The new Uno wii cost R$36,500.

      With the smaller QQ, it costs R$22,000. The old Uno can be had for R21,500. But to get it eqipped like the Chery, you’re looking at R$28,000 or more. The VW Gol will cost around R$33,000.

      The Lifan 320 costs R$30,000. The Mini R$90,000. Complete Chinese cars come with AC, ABS, power everything. Basic Brazilian cars cost more and come with a steering wheel and 4 tyres. 

      Import taxes cost between 25 and 35%.

      CKD is not allowed in Brazil unless the production is drawn back, or, in other words, re-exported and not sold in Brazil unless its re-reimported (like Mercedes does with the model it puts together in Juiz de Fora, Brazil, a hatchback class c something. Parts are imported from Germany, put together in Brazil, “drawn-back” to Germany, then re-imported into Brazil).

      As to China producing in Brazil, I have no idea how they’ll pull it off, but they must have a solution in mind. I mean, for a long time they’ll have to offer discount pricing as their brands are worthless (for  now at least).

  • avatar
    Robstar

    I just got back from Sao Paulo a week or so ago. On the way down there, my brother-in-law was talking about the brand new luxo-camry that his boss just bought & told me only really rich people could afford those.  I listened but did’nt really say anything.

    When cleaning out my bags, I had a Houston newspaper (stopped in the airport on the way down) with car ad’s that my brother-in law found.  He found the camry advertised for around $15k or so and his mouth dropped open. He asked me about it and I told him it was a fairly normal car in the US & that they were everywhere….He couldn’t believe it and asked to keep the paper to show to his boss to take him down a notch.

    I obliged.  As far as I know he’s still employed :)

    On another note, what appeared new to me since about 10 months ago:

    Hyundai advertising everywhere. Starting to see a lot more Hyundais in general. Also seeing a LOT more sport bikes (which are similarly crazy/expensive). I think down there in 10 days in a “small” town I saw 2-3 gsx-r’s a hayabusa 2 ducatis (998/monster) a few honda cbr’s….and this was outside of Sao Paulo City! Saw some Fusion’s as well (many more than last time) and more Hondas, especiall civics.

    What makes the prices insulting is that the Brazilian currency is VERY strong against the dollar, yet prices remain high. When I was there I think it was 1.65:$1 USD. I believe 10 years ago or less it got as bad as 3.8/USD.

    IMHO what is worse than the prices themselves is that imports (such as my brother-in-law’s case) above not only are expensive but are DANGEROUS. When people see a Camry, they think “OOH THAT GUY IS RICH.”!

    It’s terrible that even if I lived there, I wouldn’t own something considered pedestrian here just because of the increased chance of robbery, car jacking, etc…..owning an import makes you more likely to be a target. I’m crossing my fingers that things will change significantly there in the next 30 years or so before I retire there with the wife.

  • avatar
    Stingray

    How about US$40,000 for a Corolla? Of course! Don’t you know? That’s an executive car!

    Situation here is the same. Worse, The Corolla is actually around US$ 45K. And suc… people still “aspire” to have them. For a moment I thought you came here.
    And we haven’t even talked about the SUVs, Land Cruiser 70 or other stuff.
     
    You can now buy a New Uno in “Sporting” drag. Sadly, that sums it up. Lipstick on the regular car. No mechanical changes.

    That’s one of the reasons I hate Brazilian cars. Sorry, but I don’t like that wannabe crap. People still buys it, no hay más remedio/opciones.
    They however have 2 redeeming features: they’re somewhat robust and cheap to fix.

    Oh wait, there’s the new Fiat Bravo! Bravo! 4 years after it debuted in Europe, it’s here! No, not the new facelifted version, the old one. Ahem! It won’t kill the Stilo, either.
     
    This is still the 3rd world. Or emerging markets. Don’t forget it.
     
    If the Chinese sell their cars at their prices, they’ll give the “locals” a run for its money. However, up here the prices weren’t as low, in fact were similar. A QQ sold for roughly the same as a Spark, FAIL. I would expect a situation similar to that of Hyundai, which I also expected to be dirt cheap and it didn’t.

    • 0 avatar

      Hola Stingray!

      Yeah, you and I both know well the pain and glory of living in the 3rd, sorry, emerging world.

      In Brazil the Chinese have adapted a different strategy it seems. They price the cars at a level at or below (by a hair) the level of the most basic car in the particular segment. But then they offer only the top of the line version. So the choice is, very basic but solid brand against a very complete (for Brazilian standards), but God-only-knows-if-it’ll-be-here-come-resale-time-not-to-mention-the-value-of-the-resale brand. What would you choose?

    • 0 avatar
      Stingray

      Buen Día Marcelo
       
      The pain for sure. The glory not so much. I don’t know where the glory is living in the conditions we do. Save for the lack of regulations, which 1st world comers seem to LOVE and the lot of opportunities available.
       
      About the Chinese. Yes, they came highly equipped here, not top of the line / all the toys, but very good. A QQ had alloy wheels, power windows/locks/mirrors, front and rear fog lamps.
       
      I think that they must have cheap and widely available spare parts to succeed. From what I saw here with those brands and another nationality cars (1st hand experience), spare parts and brand permanence is a BIG concern for potential customers. If they can address those 2 issues, brands will start to establish and gather recognition. Of course, quality matters, but with a very good price and support, people will start buying them more and more. Bertel must be taking notes now.
       
      What would I choose. Ummm, I have a toddler boy as they call them up north, so I need a relatively safe car, I wouldn’t ask for a 10000 stars NCAP ride or 5789489389289289 airbags, just decent crash worthiness . The Chinese are horrible at that right now, just from seeing the youtube videos. The Iranians are better than them at that.
       
      Then, I’d wait for some years until they get that stuff and some QC together. Right now, I don’t see myself purchasing a Chinese car, be it here or in another country. In other place, I see myself buying a car with a lion on the grille, a V8 (finally) and the name of an 80′s 64 computer manufacturer. I’m sick of the sound of the 4 banger engine and want something with some power.
       
       

    • 0 avatar

      Hola Stingray!

      The glory is the cheerfulness of the people. Their basic in innocence. Close and warm family and friendly relations. There’s a saying that only in Brazil prostitutes come…

      In Brazil the Chinese are coming even better equipped (AC, ABS, ESP). And you arre right about parts. That’s one of the reasons Fiat, VW and GM manage to stay on top. The French have a terrible reputation that their spare parts are much more expensive than the competition. One of the reasons they can’t break market. Another is that people distrust so many brands. They’ve been burned before (Lada, Seat, Isuzu, Mazda, Daewoo, Daiatsu among others). They are waiting for the inevitable shake down. Safety, unfortunately doesn’t resonate (sell) much here.

    • 0 avatar
      Stingray

      The glory is the cheerfulness of the people. Their basic in innocence. Close and warm family and friendly relations.
      Agree on that one.
       
      There’s a saying that only in Brazil prostitutes come… ROFL, you made me laugh with that one.
       
      Safety doesn’t sells here either. It was my point of view. What sells here is A/C. If the A/C freezes the occupants, it will sell.
       
      The Frenchy never learn. Well, Renault kinda did, but still. French car = pr0n part prices, über complicated and expensive car. The sad part is that the cars itself are somewhat nice. Japanese parts are also expensive.
       

  • avatar
    HerrKaLeun

    I wonder how people afford cars at all. I assume Brazilian income is lower than in Europe or in the US. Even in the US I consider someone buying a $ 40,000 car rich (i know, they take like 5 mortgage to pay for it and don’t pay cash).
     
    I also think used car prices are high in Brazil since the new cars are so expensive.
     
    In the US it seems we have the lowest car prices, lower than in Europe. Definitely lower than Brazil.

    • 0 avatar

      I remember reading somewhere that more than 90% of brand new cars are financed. And average payment time is around 52 months (up to 72 month plans are availlable). That’s why the market has gone up from 1.75 million cars about 5 or 6 yrs ago to a bit over 4 million today. Not to mention that per capita income has roughly doubled over the last 4 yrs or so.

      Don’t forget the pent up demand. There are about 5 to 8 people per car (depending on who’s counting). That’s what makes Brazil such an attractive market (in US 1 car per person, Japan and Western Europe 2 people per car). Add that to the rising income and car makers salivate…

      What I hope the Chinese will accomplish is to force those already in the market to halve (or more) their margins (see Robstar above for one explanation) to more “civilized” levels. Capitalism in Brazil, though heavily regulated,is still quite wild.

  • avatar
    TrailerTrash

    That finance seems an awfully ugly picture into the future.

    When I visited there, I was amazed by the wonderful small, efficient cars.
    And soooo many manuals! Even the cool SUV was manual.
    I wish these were available in the US, but then again I never really had to drive 500 miles often as I do here.
    In America, the highway has a direct implication of what we demand in our cars. You need support, size and power.
    But around town, these would be nice.

    When I visited the Detroit show last year, I had the most wonderful time…it was empty!
    I will be at the first American show this year in a few weeks in LA.
    Hopefully I will not feel as you did in the crowd.

    • 0 avatar

      Hi TrailerTrash!

      Thanks for reading.

      All those manuals. Automatics have, of course, been around for a long time, but only recently in any decent number. A rule of thumb is that the closer you get to the 100,000 real mark, the more common the auto.

      Brazil is a continental sized country, too. Fun fact, Brazil is territorily larger than the continental USA. But motorists here must make do with small enginesand tiny cars. Somehow we survive!

      Crowd management in Brazil is at best tentative. The Salão itself is pretty lucky there’s never been a disaster. with the Olympics and World Cup coming, I hope we learn fast.

      As to the financing thing, I’ve heard many people compare the situation to that of the US house market. Some like to say a meltdown is inevitable. But I think we’ll muddle through at least another 6 years (until the end of the Olympics). Then I reckon will come reckoning time! Well, unless the government grows massively more efficient until then. Well, one can only hope!

  • avatar
    Joss

    Hmm does the government down there treat journalists like the Russians?
    Well I mean if you’re gonna get roughed-up for letting the truth out about the home market…

  • avatar
    cRacK hEaD aLLeY

    Ah, Brazil. Not for beginners. The land of the 45K bullet-proof chauffeur-driven Corolla and the most devastating, perplexing, frustrating and completely ambiguous society I’ve ever seen. How could such a wealthy country have so much poverty? How could so much misery exist side by side with so much joy? How could so much corruption happen in a place with so many honest people live? How could so much violence plague a country know for diplomacy and conflict resolution? Living in Brazil is no picnic although at first glance it may seem to be. Driving is an experience you will soon wish to relinquish no matter how good you think you are. A place where you’ll have to relinquish, too, your sense of private space and privacy if you plan on really integrating into society. A place where the concept of personal space doesn’t really exist and where people seem to be far less aware of their bodies and the impact of their presence in the environment around them than anywhere else in the world. Many Brazilians are used to, look forward and are comfortable with being in very, very, very large crowds. Don’t be surprised to find someone breathing on your neck when there’s room to spare all around. Brazilians and their bizarre affinity and patience for lines: they will find a way to engineer queue lines into daily life: restaurants, resorts, clubs, bars, professional events, shopping, buffets, bakeries, gym, online services and every single parking lot in the country: there will be a line to order and then a line to pay and then a line to receive goods/services. And there will be lines specifically designated for the elderly, pregnant women, and the handicapped. And despite all this, not many people respect lines.
    A culture deeply concerned to please others, where it’s considered polite to tell people, “Passa la em casa!” (Come over to my house!) even if you don’t mean it. So… don’t expect people to mean what they say all the time. Just sometimes.
    A place that moves at a very different pace than US/Europe. You feel this the moment you step out of the airplane. Lateness is normal, though it is often blamed on real impediments, like traffic or rainstorms. Things just tend to move slower in general. People walk slower, fast food isn’t exactly fast, and this concept applies to all parts of life, including business. Also, at least in Rio, stress is looked down upon, and people will tell you to chill out, insisting that everything will work out when facing a big problem. “Não tem problema” they say. Uh-oh. It makes you want to scream, “what DO YOU MEAN there is NO PROBLEM, exactly?!”
    And then there is the dreaded “Ter, tem mas esta em falta.” (Yes we carry it, but it’s out of stock). Oh boy. Don’t get me started…. Efficiency. Things just don’t work that efficiently down there. Sometimes due to bureaucracy, sometimes due to economic reasons and sometimes just out of sheer ignorance about how the same problem is dealt else where in the planet.
    Yes, the land where people will go deeply in debt to be stuck into horrendous traffic jams fearing for their lives inside a Corolla under a giant statue of Jesus Christ.


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