For a while, it looked like carmakers were about to give up production in the country

03/07/2024

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Stellantis’s unit in Goiana: carmaker announced an investment of R$30 billion in Brazil over the next five years — Foto: Divulgação

For a while, it seemed as if carmakers were on the verge of abandoning production in Brazil. At least, that’s what some facts indicated at the beginning of the decade.

The most striking was that of Ford, which decided to close all its factories in the country between 2020 and 2021. Then Mercedes-Benz also closed the car factory it had built in the state of São Paulo, arguing that the facility could not accommodate the most modern lines of cars of a new era, that of electrification.

Also in 2020, Audi decided to stop production at its partner Volkswagen’s plant in Paraná to assess the conditions in the country and the market. At the same time, there was speculation that General Motors would also leave the country. First, following a statement by the company’s CEO, Mary Barra, who implied that the operation would not be maintained if it continued to make losses.

Other automakers limited themselves to one-time investments. Renault, for example, announced a smaller program that would run for a year until it had a clearer idea of what would happen to the market after the pandemic.

COVID-19 was partly to blame for the slump in the industry. So was the semiconductor crisis, which shut down entire factories for many days over several months in 2021, 2022, and part of 2023.

Still, it was striking to see the automotive industry announcing major investments in electric car factories in developed countries while little progress was being made here.

Some said, among those who risk analyzing the sector, that the huge park of vehicle and auto parts manufacturers in Brazil was doomed to become scrap metal.

But suddenly this scenario changed completely. It began with the Chinese brands. BYD and Great Wall Motor decided to enter the country. GWM bought Mercedes’s plant and BYD took over Ford’s former plant in Bahia. At the same time, Audi decided to take back its space and resume production in Paraná.

From the end of 2023, new cycles began to emerge for incumbent companies. Renault’s Brazilian operations were incorporated into the company’s global plan.

The coming and going of the top executives of the sector began in Brasília. The global heads of these companies decided to come to the country to personally deliver the news to the Brazilian government.

Since November, several high-ranking executives have visited the presidential palace, including Makoto Uchida, CEO of Nissan, Shilpan Amin, head of GM’s international division, and most recently, Carlos Tavares, CEO of Stellantis, who was in Brasília on Wednesday.

The announcement of an investment of R$30 billion in Brazil over the next five years is not only a decisive step by Stellantis to maintain its leadership in Latin America, an important region for its activity. It also confirms that Brazil will not disappear from the map of the automotive industry—at least not before the next decade.

“I’ll see you in 2030,” Mr. Tavares said in an interview on Wednesday (6). In that time, Brazil will have everything it needs to remain among the world’s top 10 vehicle producers. It was eighth in 2022. The 2023 ranking has not yet been announced.

The country’s economic environment weighed heavily on the assessments of these companies, which tend to make long-term investments. Executives also appreciated the government’s tax incentives in programs that reward innovation and emissions reductions, such as the recently launched Mover.

In the case of large companies such as Stellantis, Toyota, Volkswagen, Renault, and perhaps GM, the funds will be used to produce hybrid cars—with an electric motor and an internal combustion engine that can run on ethanol.

This solution will help put Brazil on the electrification map without causing major trauma to the current production park and without making cars unaffordable for the majority of Brazilians.

*Por Marli Olmos — Brasília

Source: Valor International

https://valorinternational.globo.com/