Musings from the 2012 Sao Paulo auto show

Sao Paulo, Brazil (Brasil) – Car companies in Europe are shutting production plants, China’s economy is slowing. CEOs from car companies, such as General Motor’s CEO, Dan Akerson, and the Chairman of the Board of Management (CEO) of Volkswagen AG, Martin Winterkorn, are happy to be attending an auto show in Brazil.

Lamborghini’s President and CEO, Stephan Winkelmann, sat with Fabrizio Giugiaro, co-chairman of Giugiaro design, the ultimate Ital-design shop, who sat with the enigmatic Senior Giorgetta Giugiaro, signing autographs for the group of the audience that were in the know when it comes to design.

The top four companies in Brazil are Fiat, Volkswagen, General Motors and a distant Ford as number four.

VW AG’s Winterkorn was asked about being number two in marketshare in Brazil, “we are number one in South America, number two in Brazil.” When asked when he thought he would be number one in Brazil he answered “within three years.” Guido Vildozo, an industry analyst with IHS Automotive, flatly disagrees.

Unlike China, which has hundreds of domestic car companies, Brazil does not have a Brazilian domestic car company. Instead they have relationships with car groups, such as General Motors, that have been producing vehicles in Brazil for over 80 years. GM is the reason Brazil has flex-fuel vehicles, without the flex-fuel vehicle Brazil would not be off the dependence of foreign oil.

The Sao Paulo auto show is part auto show, part carnival. Mercedes-Benz showed their newest cars to the tunes of a Brazilian lyrical voice percussionist that reminded me of Al Jarreau of yore.

2012_spas_onix Musings from the 2012 Sao Paulo auto show Automobiles and Energy Automotive executives BMW BRIC (Brazil, Russia, India, China) Car shows Chevy Fiat Ford GM Lamborghini Manufacturers Volkswagen

Chevy introducing the Onix

General Motors, who just signed a football (known to Americans as soccer) agreement with Mancheser United, had Brazilian autoracer Emerson Fittipaldi on hand with the beautiful Brazilian actress Fernanda Lima acting as the host of the unveil of Chevy’s new Onix.

Volkswagen AG, who is known for winning races with Audi’s diesel and e-tron, had Brazils top football (aka soccer) star Neymar center stage. The unveil was almost eclipsed by Neymar being in the audience and the crowd had to be subdued so that the Volkswagen Gol could be shown.

2012_spas_neymar Musings from the 2012 Sao Paulo auto show Automobiles and Energy Automotive executives BMW BRIC (Brazil, Russia, India, China) Car shows Chevy Fiat Ford GM Lamborghini Manufacturers Volkswagen

Brazilian soccer player Neymar and the VW Gol

Nissan unveiled eXtreme, a worldwide concept. Shiro Nakamura, Nissan’s chief designer, was on hand to talk about the car and the Brazilian market. Nissan is spending $1.4 billion on a new manufacturing plant near Rio de Janiero.

General Motors’ market share has decreased from 24.3% to 18.3%, but Grace Lieblien, president of GM Brazil, is excited because General Motor’s third largest market will be sweetening the portfolio with an array of vehicles, seven of these in the next year; Onix, Trailblazer, Malibu, Camaro, Cruze and Sonic, Spin, Captiva, Cobalt, Agile, S10 and Montana.

“The core of the Brazilian market is the B-segment market, it is the bread and butter of the industry,” said IHS’s Guido Vildozo. The Onix is new to Brazil and a member of the B-segment. Vildozo “Its a segment you have to be in and it’s a segment thats seen a lot of competition.”

2012_spas_extreme Musings from the 2012 Sao Paulo auto show Automobiles and Energy Automotive executives BMW BRIC (Brazil, Russia, India, China) Car shows Chevy Fiat Ford GM Lamborghini Manufacturers Volkswagen

a worldwide concept unveil from Nissan

Vildozo expects volume to grow in Brazil, possibly as high as 6 million unit’s, but Vildozo is apprehensive about the car companies that have lost market share being able to regain market share, “It’s going to be hard to retake market share because we’re expecting anywhere from 10-15 new products a year. And those products are coming from the other OEMs. It’s not only GM, Fiat, Ford and VW that want market share Peugeot and Renault, Hyundai, Nissan and Toyota have all made announcements about coming into Brazil.”

But not everyone agrees that the industry is growing. It depends on which industry you belong to.

There are two automotive lobby groups inside of Brazil; Anfavea and Abeiva.

The first day of unveils, Monday, was mainly by Anfavea members. Anfavea, Associação Nacional dos Fabricantes de Veículos Automotores, has been the lobbying group for the car companies that have production in Brazil since 1956.

The second day of unveils, Tuesday, was mainly by Abeiva members. Abeiva, Associacao Brasileira das Empresas Importadoras de Veiculous Automotores, the lobby group for the car companies that import cars. These companies are not part of the South American trade agreement known as Mercosur (along the lines of NAFTA), or the bilateral trade agreement between Mexico and Brazil. Most of these vehicles are luxury unit’s, such as Lamborghini, Maserati, Jaguar and Chinese cars.

Ricardo Strunz is one of the Director’s for ABEIVA. Strunz says that Brazil has always had heavy import duties, and engine displacement tax, but now they have a new 30 percentage point tax on a vehicle commiserate with local production, or lack thereof, of a car company. This could mean that an imported car with an engine displacement of over 2-liters would cost an extra 90 percent.

This leads many car companies, such as BMW, Chery, JAC Motors, and Landrover to announce that they will move production to Brazil. At which point they will become part of Anfavea, or part of the first day of the Carnival.

2012_spas_abeiva Musings from the 2012 Sao Paulo auto show Automobiles and Energy Automotive executives BMW BRIC (Brazil, Russia, India, China) Car shows Chevy Fiat Ford GM Lamborghini Manufacturers Volkswagen

Abeiva companies

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.