Chinese cars, Brazilian market

China’s biggest auto exporter, Brazil Chery Automobile Co, is attempting to triple its market share in Brazil by 2015, said Luis Curi, CEO of the Brazilian unit in an interview to Bloomberg.

Advertising Chery cars in Brazil

The company’s rate of purchase from its Chinese parent hovers around 4,000 vehicles a month, with practically no stock in the country, Curi said.

The Brazilian market share of Chinese automakers has expanded to 3.29 percent this month, from virtually zero in April 2010, according to data from Fenabrave, the national car dealers association. Brazil is already the biggest market for Chery outside China. Profit margins for the next decade should be “insignificant”, with the company working at break-even level.  Chery expects to sell about 30,000 vehicles in Brazil this year and  wants to attain 3 percent of sales in the South American.  Production begins at a $400 million factory the company is building in Jacarei, in Sao Paulo state.

Other chinese car manufacturers in Brazil

Chery was the first of the new wave of Chinese car manufacturers in early 2010 and has 82 dealers in Brazil. Chery was followed by Chongqing Lifan Auto Co in December and Anhui Jianghuai Automobile Co’s JAC Motors in March.

Sales for 2012

The company foresees sales of between 30,000 and 35,000 cars in 2012. Chery increased its market share to 1.1 percent in mid August from 0.15 percent in May 2010, according to Fenabrave.

Competition

In 10 years there will be significant changes in the top ranking of automakers in Brazil, Curi said. By then, Chery expects to have reached enough production momentum to scale down costs, improve margins and attain its goal of being among the top five automobile companies in the country.

Brazilian customers have a very low rate when it comes to being loyal to a car brand. Only 8% do, leaving space for new comers in the market. In the future, Curi expects tougher competition in Brazil from well established car manufacturers rather than other companies new to the market. For now, small cars like the C3 from Citroen and the 207 from Peugeot became less expensive after the chinese came.

Source: Bloomberg News and Fenabrave.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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