Since the pandemic, the automotive market in Brazil has been facing a series of stoppages, drops in sales and interruptions in production lines. Recently, even used vehicles, which have experienced great appreciation, have seen their prices fall in recent months.
With that, a warning sign is lit in the automobile sector. With high interest rates and the population’s indebtedness, credit to buy a vehicle, new or used, is increasingly difficult. And what does the future hold for the sector?
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Interest rate is the villain of the moment
The week began with three major companies suspending production and giving collective vacations to their employees: General Motors, hyundai and Stellantis (owner of the Fiat, Jeep, Peugeot and Citroën brands). Despite the lack of parts still haunting the sector, the main reason for the stoppages is the slowdown in the market, which means that the industry avoids having large inventories and stops producing.
For Alessandro Azzoni, lawyer, economist and Deliberative Advisor of the Commercial Association of São Paulo (ACSP), the high interest rate has become the main obstacle for sales to take off again.
“The interest rate directly affects the final sale, since most people do not buy the car in cash, they buy the car financed, using a down payment and the remaining balance is financed. So interest at this level is a brake on vehicle purchases. According to the Focus bulletin last Monday (20), we have an inflation forecast of 5.96%, so I believe that a Selic rate of 8 or 9% would be more consistent than the current 13.75%.”, he said.
Marcelo Gabriel, professor of the Postgraduate Program in Administration at ESPM, also sees the interest rate as the “villain of the day” for the automobile industry, which seeks alternative markets for its production.
“Right now, the impact of the real interest rate is reflected in all consumer purchase decisions and this situation impacts all sectors of the economy, including the automotive sector. In these scenarios, choices are prioritized and the decision to buy a new vehicle is postponed. On the other hand, we have an installed capacity to produce 3.5 to 4 million vehicles per year and the results of Anfavea show that 2.1 million units were sold in 2022”, he explains.
Will the government intervene?
With this scenario, some government action is expected, either an incentive through the reduction of the tax burden for vehicles at first and an attempt to speed up the tax reform in the sequence, since taxes have a very large impact on the final value of a vehicle. car 0km.
For Arezzo, the expectation is that there will be an incentive soon, also due to the connection of the current government with the automobile industry. “In the past, the Lula government promoted incentives to white goods and the automobile industry, for example, which boosted sales. So, the government must redo the same processes. But, with the high interest rate, even if the government promotes some incentive, it is as if you win and lose at the same time”, he analyzed.
Can we have a “new Ford?”
With a scenario not so favorable for companies in the automotive sector, there is a fear of a brand leaving the country, as happened with Ford, which closed its factories in Brazil in January 2021 and started to sell only imported products.
According to Gabriel, the chance of another player in the segment closing its production line is difficult. “Ford’s product line in the world is oriented towards the American-influenced market of pickup trucks such as the Ranger and F-150, while hatchback and sedan models such as the Ka and Fiesta came from European platforms. Even Ecosport, which was developed in Brazil under the Fiesta platform and exported, followed the same product alignment logic. I don’t understand that there is a possibility in the medium term of an automaker leaving the country. What we will see is the adaptation of the offer to the Brazilian socioeconomic reality, like what Renault does, which produces Dacia models in Paraná, developed for the needs of emerging countries”, explained the professor.
Companies stop making new cars
GM, Hyundai and Stellantis suspend production and take collective vacations
Government monitors situation
Lula says he will call the automotive industry to talk and demands greater national production
Market also slows down among used cars and prices fall
Used cars devalue; know the model that lost the most value
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