Brazil in September 2010: Gol Slow

While in August it was tudo azul, September brought some clouds to the previously céu de brigadeiro. Sails dropped 1.75 percent on the month (falling to 291,409 vehicles sold). This is the first time this has happened since May. According to Fenabrave’s President Sérgio Reze (in declarations to Brazilian communications giant Globo’s news portal g1.com) this was due to September having one less sales day than August. As giant Brazilian web provider UOL points out, the silver lining in the clouds is that on the year the market is still up by 7.12 percent (good for a grand total of 2,368,932 sales).

That’s what the suits are saying. My take? Well, I think the new Uno effect is starting to hurt less. Other manufacturers have by now absorbed the shock and are slowly but surely recomposing their margins by lifting prices ever so slightly and accepting that their cars are selling less. As the Uno’s declared raison d’être is to topple the Gol, only VW is still on full war footing, keeping their car aggressively priced and marketed. In Brazil, higher prices mean reduced sales. I’ll guess the market won’t be growing significantly on the month anymore. On the year the figures will look good though, as sales have reached a new threshold. That’ll keep the suits happy and give them a reason to say all’s fine and dandy.

As to the hotly contested first place? The Uno suffered its first sales drop since launch. The gap though keeps narrowing. Last month it was 1,761 cars. This month it’s down to 1,458. The Gol hangs on, but the battle is far from over.

Brazil’s Best Selling Cars (numbers courtesy of UOL)

Comments: Just one change in rank. Except for the Chevy cars, all others sold slightly less than the month before, which adds credence to the one less sales day effect. However, the numbers show sales have stagnated. The big news is that OTY, the VW Fox will pass Fiat’s Palio (Fiat’s bleeding, more on that below) and take fourth position next month. The Gol x Uno battle is still too close to call, but the Gol is showing strength.

Top 10 Brazilian Car Makers Ranked by Sales and Market Share (numbers courtesy of g1)

Comments: No excuses this time. Fiat is hurting. Sales dropped for the third straight month, which means that the new Uno is causing damage to all of Fiat’s small models. Initially, Fiat was not hurt, but now it is. It hasn’t helped Fiat’s case that they are in the middle of changing all their cars to the use of the new E.torQ engine. This gave them an excuse to bump up the prices. The market has not taken kindly to this. Fiat (unofficially) said they expected that the new Uno would help them get a 25 percent market share. The new Uno has been selling very well, but not enough to carry the rest of the line. Achtung Fiat!

The clear winner this month was GM. They increased market share by more than a percent. VW better watch out. In fact, according to Brazilian automobile industry watcher autoinforme.com, VW and GM were neck and neck until the last day of the month. This caused both of them to give special conditions and special pricing to earn bragging rights. The result was that the last day of the month was a record day (21,710 cars sold). For that day VW led in sales (4,863), GM came in second (4,302) while Fiat lagged in third (4,253).

Further on down the list, Peugeot was the big loser. Why? End of the free air con sales promotion. Again, in Brazil, the key to win sales is lower prices. Or, include attractive content (like A/C) for free. This will get your customers excited. Just remember yesterday’s commercial.