China tightens grip on Brazil’s car market, triples exports

With this performance, Brazil jumped from seventh to the third-largest destination for vehicles between the first quarters of 2025 and 2026, behind only Russia and the United Kingdom. In electrified vehicles—which include fully electric and hybrid models—Brazil rose from fifth to third place, behind Belgium and the United Kingdom. In the ranking of internal combustion cars, Brazil also gained prominence, moving up from 16th to seventh place.

The data comes from Chinese customs and considers shipments made in the first quarter. Some of the vehicles are still in transit and have not yet arrived in Brazil. Shipments of automobiles typically take between 40 and 60 days from China to customs clearance in Brazil.

Higher import tariffs, a favorable exchange rate, and a wave of model launches are among the factors behind the faster pace of Chinese vehicle arrivals in Brazil, according to experts. They also note that the growing presence of Chinese cars on Brazilian streets reflects the consolidation of brands in a geopolitical context marked by rising protectionism, global uncertainty, and China’s difficulty in boosting domestic demand—factors that have contributed to closer trade ties between Brazil and China.

Data from Brazil’s Secretariat of Foreign Trade (Secex/MDIC), which registers what has already cleared customs in Brazil, shows part of the impact of Chinese cars. In the first quarter, Brazilian imports of vehicles from China reached $1.5 billion, up 552.5% from the same period of 2025. Chinese manufacturers supplied 65.6% of all cars imported by Brazil. Argentina ranked second, with 11.3% and $253.2 million, down 25.5%, also from January to March.

According to Tulio Cariello, director of content and research at the Brazil-China Business Council (CEBC), the trend reflects an anticipation of the final increase set by the Brazilian government in its current schedule of higher import taxes on electric and hybrid vehicles. Tariffs, he noted, are expected to reach 35% in July this year, up from the current 28% for plug-in hybrids and 25% for electric vehicles.

Reports released by the automotive industry, noted André Valério, an economist at Inter, show that vehicle imports accelerated in 2021, but there was a sharp inflection in mid-2023, when the debate over the current tariff hike agenda for electrified vehicles intensified. The schedule was set in 2023 and has been applied since January 2024, with gradual increases in import tariffs. Rates started at 10% and will reach a ceiling of 35% in July. Before that, imports of electric and hybrid vehicles were tariff-free. Valério noted that, beyond this schedule, the increase in shipments from China to Brazil also reflects a more aggressive sales push, driven by the automotive industry cycle, with the launch of 2026/2027 models.

The increase in the volume of imports of made-in-China cars also reflects, in parallel, rising demand for the type of vehicle offered by Chinese manufacturers, said Cariello, of the CEBC. “Many people want to buy electric cars, which today are synonymous with Chinese cars. People see Chinese cars on the streets and recognize them as high-tech products.” Cariello noted that China was by far the main supplier of electric cars to Brazil, accounting for 97% of imports from January to March. In the case of plug-in hybrids, the country also led by a wide margin, with 89% of imports.

According to the Brazilian Electric Vehicle Association (ABVE), 74.1% of electrified vehicle sales in Brazil in 2025 were from Chinese manufacturers. BYD led the market with a 50.4% share. Total electrified vehicle sales reached 223,900 units last year, up 26% from 2024.

There is a positive perception of Chinese products, said Cariello, which also applies to combustion-engine cars. “Chinese manufacturers are targeting the electric vehicle market, but this benefits China in other segments in Brazil as well.”

Data from Anfavea, which represents Brazil’s automotive industry, show that from January to March this year, vehicle registrations totaled 625,200 units, up 13.3% from the same period of 2025. Imports, which totaled 119,100 units, rose 5.6%. Made-in-China vehicles grew at a faster pace. Registrations reached 54,300 units, up 68.9%. When releasing first-quarter data, Anfavea president Igor Calvet recalled that in August last year, China surpassed Argentina as Brazil’s top external supplier of vehicles, and in March, China marked eight consecutive months as Brazil’s largest vehicle exporter.

“We have significantly reduced purchases of vehicles from Argentina, which used to be our main source of imports. Some consumers have preferred electric cars, and China is highly competitive and the main global supplier,” said Valério, of Inter. “They offer a very strong package: a technologically advanced car at a competitive price, along with the promise of lower fuel costs. The old image of Chinese cars—cheap but with problems in spare parts—has collapsed.”

Data from the Foreign Trade Indicator (Icomex), released by the Brazilian Institute of Economics at Getulio Vargas Foundation (FGV Ibre), show that the volume of Brazilian imports of durable consumer goods from China rose by 204.8% from January to March this year compared with the same period in 2025. In March alone, the increase reached 330.7%. Average prices, however, moved in the opposite direction, falling 9.6% in the first quarter compared to the same period of 2025. According to Secex data, automobiles accounted for 71% of Brazil’s durable consumer goods imports from China in the first quarter of 2026. In total imports, the share of Chinese goods was 8.2%.

Chinese data contrast with those from Argentina. The volume of Brazilian imports of durable consumer goods from Argentina fell 25.8% in the first quarter, while average prices remained virtually stable, up 0.3% compared to the same period of 2025. “Tariffs imposed by Brazil on vehicle imports were not enough to deter Chinese cars, because China has strong economies of scale and their prices ultimately offset the impact,” said Lia Valls, a professor at UERJ and researcher at FGV Ibre.

A more favorable exchange rate for imports also helped create a more supportive environment for foreign purchases this year, Valls said. In the first quarter of 2025, the exchange rate per U.S. dollar averaged between R$5.80 and R$5.90. In the same period this year, it ranged between R$5.20 and R$5.30.

For Welber Barral, a partner at BMJ, Chinese government data also show that trade diversion occurred in some cases. He highlighted Mexico, which often serves as a gateway to the U.S. market. From January to March 2025, Chinese vehicle exports to Mexico totaled $1.4 billion, making it the third-largest destination at the time. That position was taken by Brazil, and Mexico dropped to 12th place. Chinese vehicle exports to Mexico fell by nearly half in the first quarter of this year, to $750.8 million.

For other destinations, China continued to boost vehicle exports this year. To Belgium, the top destination for Chinese electrified vehicles, exports totaled $2.1 billion from January to March 2026, a 47.6% increase compared to the same period in 2025. To the United Kingdom, ranked second, exports reached $2.2 billion, marking a 104.3% rise.

Valls, of FGV Ibre, also pointed to the geopolitical context, including trade rivalry between the United States and China, intensified under U.S. President Donald Trump. She also noted a broader environment of protectionist policies across multiple countries, while China maintains high levels of vehicle production. “This output needs to be absorbed by other countries, as China is struggling to boost domestic consumption.”

Automobiles, Valls added, help China maintain its position as the largest source of Brazil’s total imports. According to Secex, 26.3% of all Brazilian imports in the first quarter of this year came from China. At the same time, she noted, trade ties between Brazil and China have been strengthening, with an increasing share of Brazilian exports going to China. This trend has intensified amid Trump’s tariff policy and the war in the Middle East, with oil shipments to China increasing.

According to Cariello of the CEBC, the current flow of Chinese vehicles to Brazil is likely to remain strong in the coming months, as companies take advantage of the window of opportunity created by still-relatively low import tariffs. In the longer term, however, imports are expected to decline as Chinese automakers expand production in Brazil. At least five have confirmed local production. In addition to GWM and BYD, which have their own plants, Geely and Leapmotor have partnerships with Renault and Stellantis, respectively. GAC has announced it will begin producing cars in Brazil in 2027.

* By Marta Watanabe and Álvaro Fagundes — São Paulo

Source: Valor International

https://valorinternational.globo.com/