By on December 24, 2012

Video o.k. for network TV in Brazil, but NSFW in certain jurisdictions. Do not click if naked derrieres offend you.

The numbers for the first eleven months of the year have been consolidated. The first fortnight of December has been basically more of the same. It’s now quasi-official: Fiat is the biggest pig in the sty for the eleventh time in a row. They already have an ad out celebrating the fact. Last year the Italians waited until January to commemorate. This year they had no such compunctions.

Curious is the theme they chose to celebrate their victory. Don’t think a green-eyed spermatozoon, masturbation and bodily functions would be GM’s choice to celebrate their market dominance in stodgy America. Oh, those racy Italians!

According to a conversation I had with a senior Fiat suit last week, maybe this has to do with the fact that they are feeling the heat from VW and think they need to rub their leadership of the market in (due to VW being leader for 50 years and the Gol having been the most sold car for over 25 years, many Brazilians still believe VW is the leader in our market).

The Fiat grandee expects that next year VW will launch in the up! in Brazil. This car will be priced lower than the Gol and could give the Germans the lead in Brazil again after a decade’s hiatus. Fiat will have nothing new to fight the up!. Moreover, VW has recently hired the Fiat veteran who was basically responsible for car pricing in Brazil. This guy has his finger all over the market’s pulse and raised and lowered Fiat’s prices until he found the sweet spots. As other makers nowadays set their prices after Fiat’s lead (VWs start 5 to 10 percent over Fiat and Renault-Nissan low-balls Fiat 5 to 10 percent), the Italians worry (the exec confided to me) that VW now has the brains to regain for themselves the ability to establish pricing in Brazil.

Relative to the market, Fiat, Nissan and Kia made the most waves this year, according to Brazilian car specialist site webmotors. Fiat and Nissan in a big way and Kia in a negative way.

Despite increased competition and capacity constraints Fiat gained a little over 1 percent on the market by selling 11 percent more cars year-on-year. Nissan was the company to gain the most in sales (72 percent) while Kia lost almost 47 percent. Kia has not fallen out of favor with consumers but they suffered the most at the hands of government policy. Parent Hyundai also suffered. So much so that, relative to last year, they were overcome by their Japanese nemeses Honda, Toyota and Nissan.

Due to Nissan’s rise, Peugeot was shown the door of the top 10.

To put all of this in perspective, Brazil is the world’s fourth largest car market. Behind China, the US and Japan, but bigger than Germany, the UK or India.

Top 10 Brands, Brazil

Position (in 2012) Brand

Sales Jan-Nov 2011

Percentage

Sales Jan-Nov 2012

Percentage

Change (%)

1 Fiat

684,970

22.12

763,952

23.21

1.08

2 Volkswagen

633,876

20.47

697,782

21.20

0.72

3 Chevrolet

571,232

18.45

580,210

17.63

-0.82

4 Ford

285,620

9.22

292.,811

8.89

-0.33

5 Renault

172,722

5.58

219,342

6.67

1.08

6 Honda

86,948

2.81

122,699

3.73

0.92

7 Toyota

86,913

2.81

99,097

3.01

0.20

8 Nissan

55,624

1.80

95,608

2.90

1.11

9 Hyundai

104,110

3.36

91,544

2.78

-0.58

10 Citroën

82,236

2.66

67,846

2.06

-0.59

Get the latest TTAC e-Newsletter!

19 Comments on “Brazil in 2012: Fiat Celebrates Early For Fear That VW Will up! Them...”


  • avatar
    Magnusmaster

    Note that the Brazilian up! (which may be sold in other emerging countries) will be almost completely different than the one sold in first-world countries, although the platform will be similar. It will be slightly larger than the European model, have a similar design, the interior will be made of very cheap plastic and there will be less gadgetry and safety features. All of this so that they can keep the up! as an entry level car globally, and finally axe the old Gol.

    • 0 avatar

      heyMagnusmaster!Feliz Natal!

      You’re right on all counts except that the Gol will not be axed. They thought the Fox would do the Gol in but it didn’t. Heck they can get 2 or 3 more generation from the G5, can’t they?!

      On up!, external design and pricing will be key. Brazilians love to show off their new “possante” to their nighbors. If it’s flashy outside, they (unfortunately) don’t care much for the interior.

      As to pricing, as pointed out in article, they may have the appropriate tools to really rock the market.

      Let’s see.

  • avatar
    mike978

    Marcelo – thanks for the article. I never knew Brazil was the fourth largest market, that is a surprise. Also struck by how regional companies seem to be in strength. FIAT has Brazil and Europe, Toyota has Japan, Asia and the US. VW seems to be the only one that will in the next few years be strong in all key markets (say a market share greater than 6 or 7%).

    • 0 avatar

      hey mike! merry christmas!

      That is true. For a while now Fiat and Vw have been battling it out in Brazil. Next year will be different. You read it hear first, VW will regain the lead in Brazil and GM will give Fiat a run for second.

      That is also why Chrysler is so important for Fiat. It gives the Italians a presence in America. Now, all they have to do is gain a foothold in Asia and they guarantee the next 20 yrs!

      VW does seem strong all over the world. Other companies will have to emulate them to survive

  • avatar
    Volt 230

    What Brazil has accomplished in liberating themselves from foreign oil is remarkable and they should be commended, while we argue here about corn vs sugar cane vs food sources, they did it there using I believe only sugar cane.

    • 0 avatar

      Dont forget petrol just yet. Outside of São Paulo, most other places people don’t use ethanol cause it’s jut not competitive price-wise. Also, in the state of Rio a lot of people use CNG as its heavily subsidized there.

      But the main factor for independence is increased petrol production. Some new refineries are also under construction.

      Compound that with growth in US petrol production and guess peak oil is just about that. BTW, in the next 10 years, Brazil could become a big time petrol exporter. Not Venezuela big, but enough to bring prices down (or keep them stable).

      Thanks for reading!

  • avatar
    gslippy

    Hey Marcelo – Can you elaborate on the government policies that affected Hyundai and Kia so much?

    And that ad is a strange one.

    Merry Christmas!

    • 0 avatar

      Hey! Merry Christmas!

      Basically they raised one of the taxes that affect cars by 30% for those makers who sell cars in Brazil but don’t produce locally (importers, like Hyundai and Kia). For those who have factories in Brazil (like the the traditional big Brazilian 4, the French, the Japanese) the tax was actually lowered. Some like Nissan, who are building a factory in Brazil have been given special treatment, too.

      Anyways, looking back on my articles on TTAC you’ll find more elaborated answers. It seems to be working the way the government intended. Aimed at the Koreans and Chinese, they have seen their sales plummet. Also, it has prodded those with plans to build factories to hurry up plans (Nissan, BMW, JAC – Chinese). Kia is still dithering but Hyundai has just finished building their factory in Brazil but so far it produces only te HB20. THeir other cars have been slapped by the increase in taxes.

      Happy New Year!

  • avatar
    automaniak

    Marcelo, you say:
    ‘Fiat will have nothing new to fight the up!’
    ‘This car will be priced lower than the Gol and could give the Germans the lead in Brazil’

    I think Fiat will just cut Uno price ;)

    By the way, do you know if Fiat intend to refresh Palio Weekend and Linea ? New Palio HB + Siena make great job for Fiat in Brazil.
    New Linea (face lift) is already available in Turkey where it’s produced for (East) Europe.

    • 0 avatar
      Magnusmaster

      Palio Weekend already got a facelift, the new Palio wagon won’t be out until 2014. It’s not clear if the Linea will be facelifted in Brazil as it bombed. It might get replaced by the Viaggio.

      It’s not exactly true that Fiat has nothing to counter the up! with. There are already rumors of a new model built from the old Palio platform. Not sure if it’s just a makeover of the Palio Fire or a new model all together, but Fiat seems to be prepared.

      • 0 avatar

        Hello automaniak and Magnusmaster!

        Everything is in a flux right now. Indecisions abound. Rumors have it that both Palio Weekend and Strada will not be placed on the new platform that underpins New Uno and Palio/grand Siena. However, that doesn’t man they’ll die. They probably will live on many years using the old Palio platform with many a facelift. Seems Fiat is in talks with Suzuki and they might go that route and just make a small CUV/SUV (a la Duster/EcoSport) and derive a PU from that. BTW that rumor gains credence with the continuation of Sedici. Or Palio WE and Strada skip a generation and come back next year.

        Linea too is not in concrete yet. From what I feel (more than what I know), they’ll facelift it. Viaggio will come but only in 2015 or even 2016. Linea will then be placed in its real category and fight the likes of Honda City and Polo sedan. Addded thise two to the car provisionally called City to be built in new factory in Pernambuco also coming in 2015, which will be the real up! fighter, 2015 and/or 2016 will be the product onslaught from Fiat. In those years Fiat do Brasil (and by extension Fiat Latin America) will be radically different.

        So 2013, 2014 is rather bleak for Fiat. Almost surely VW will pass them and GM will come very close.

        Magnusmaster, on your last assertion, I haven’t heard anything. Like I said the real up fighter will come from Pernambuco. But it is interesting. Maybe the death of the Mille will come sooner than expected? I mean know from lowliest to highest Mille, Palio Fire, Uno, Palio, Siena, Idea/Punto, Linea, Bravo. Hard to see where a new car would fit unless Mille is eliminated. As Mille will probabbly die in 2014 due to airbag mandatory, in 2015/2016 the new line will look like this City, Uno, Palio, Siena, Idea(?)/Punto(?), Linea, Bravo (?), Viaggio.

        As you see lots of question marks. But it’ll be interesting

    • 0 avatar
      automaniak

      Right, I forgot about ‘City’ car ! (3 door, small city car)
      It’s very important, also destined for Europe as entry level below Panda.
      Polish factory Tychy wait for this car so much as they just fire 1/3 of workers due to lower production (Fiat 500, Ford Ka, Lancia Ypsilon)as new Panda was moved fm Poland to Italy.

      Noticed you omit 500 + Freemont in Fiat model range. I think they are important cars adding some volume for Fiat Brazil.

      • 0 avatar

        I forgot the 500 and Freemont as I was thinking in terms of local production. Nothing definite yet but the Freemont has been rumored to be starting next year. It’s a very expensive car though, so it will never rock the charts, but it helps Fiat’s brand, as it is a well accepted prestige car. The 500 is even in Brazil (the land of small cars) a niche car. But it also gives Fiat some prestige.

        Both 500 and Freemont are imported from Mexico and now are subject to quotas. As Fiat has a factory in Brazil, its case is different from Kia’s for example. Though it can import the cars, the numbers and taxes on them depend on a complicated formula. Basically the government uses the tax as an incentive, and the more locally sourced content in the car, and the more the company invests in local R&D, the greater the number of cars it can bring in and the lesset the taxes it must pay on thse cars.

    • 0 avatar
      automaniak

      I think both 500 and Freemont are quite successful in Brazilian market this year, even in compare to some local production. They add volume, market share and, you are right, some prestige for Fiat.

      Jan-Nov 2012:

      Palio Weekend 17.311
      Fiat 500 – 14.885
      Freemont – 10.754
      Bravo – 9.429
      Linea – 7.590

      I thought Brazil and Mexico have free trade agreement, no duty and quotas. Is it more complicated ??

      • 0 avatar

        Brazil basically redeclared the terms of the deal with Mexico as soon as Mexico had managed a financial surplus. Brazil was exporting to Mexico simple, small cars while more sophisticated cars were coming in from Mexico. Brazil made money off of Mexico for many years, when the balance became negatice, the government reacted.

        I know lots of people here have a knee-jerk reaction: Gov intervention bad! But the truth is that due to Mexico’s proximity with US, makers chose to make better cars in Mexico. The local industry was slowly becoming obsolete as Brazilians and the surrounding markets accepted the simpler cars. In an effort to make car makers produce here, the gov took this action. In short: quotas for Mexican imports, high taxes for cars coming from anywhere else. Brazil only import freely from Argentina now.

      • 0 avatar
        th009

        While proximity to US is a plus for Mexican production, the bigger factor is the free-trade agreement with US and Canada (NAFTA), which allows cars to be exported duty-free to those countries — plus Brazil (until recently), Chile, Peru, EU, Japan and a number of smaller Latin American countries.

        Most of those countries will charge duty for Brazilian exports, making manufacturing in Brazil less attractive. But Brazil has chosen a different path under Dilma Rousseff …

      • 0 avatar

        Well th009, if you add up all the South American markets, indeed all of Central America (excluding Mexico) the market is not as big as Brazil’s. So if your a maker does it make sense to be in Brazil. Sure even at the high (relatively) cost. In a market the size of ours the makers have to play by our rules. It’s no bad thing. Free trade with Mexico was killing technological advances in BRazil. GM Brazil, VW Brazil used to be big tech developers. The intervention gave the makers here a breather. Guaranteed some jobs, helped keep the crisis away. It can’t last forever or protect so much that the locals don’t feel the external pressure. If that happens it’ll be a repeat of the jobless and growthless 80s and 90s. But protectinism and gov investment provied the Brazilian Miracle of the 70s.

        Brazil will not give it up. Rightly or wrongly people believe in this in Brazil. Hopefully this time around, the tinkerers in Brasilia will have learned from past experiences and due it better.

        Fiat ain’t complaining. Around 800 000 cars in one country. One legal department, one administration, one financial department, one dealership network. Imagine all the costs of setting up the same for each and every small South American market?

        Like a Fiat guy told me back in the 90s when they stopped producing in Argentina. I said you guys are crazy. You’ve been in Argentina for 80 years, you’ve been market leaders. He countered that at that moment (95 I believe) Fiat had sold all year in Argentian the same they sold for one month just in my city in Brazil (BH)! I understood of course. The investments, jobs and whatnot will follow the money. Brazil has to make its monet attractive. It can’t compete with US and Canada.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • J & J Sutherland, Canada
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India