Brazil and the Fiat, a 2012 record

Fiat Brazil

Fiat Strada 1.6 Adventure Crew Cab 2011 © order_242

The Brazilian car market ended 2012 as the best year in its history, with a volume of 3,634,510 units sold (cars + LCVs), an increase of 6.1% compared to 2011.

Fiat sold 838,219 vehicles, establishing the best result in its history in 36 years of presence in Brazil and once again confirming Market leader with 23.1% share (it is the eleventh in a row!), an increase of 11.1% on 2011; ahead of VW with 21.1% share and GM 17.7%.
A success due in particular to the sales results of the new Uno (272,859 units) and the Strada pickup (118.620 units), respectively in the ranking of sales on the 2nd and 6th place, while the best-selling model ever reconfirms the VW Golf with 293,489 units sold.

Among the competitors we find an interesting growth, even if minimal compared with the three big market mentioned, for Citroen (6.6%), Hyundai (3.7%), Kia (3.0%) and Nissan (2.9%), Ford essentially stable (8.9%), Renault (6.6%), Honda (3.7%) and Toyota (3.1%).
In the Brazilian market appeared the Chinese brand Jac, with a range of popular models in the segments similar to those of the Palio family of Fiat, adopting the strategy of offering ‘value for money’ at present with minimal results.

At the level of market segmentation, we remind that taxation is favorable for cars with engines less than 1000 cc. This is the reason why these are about the 40% of the total sales.
A global performance certainly encouraged by government incentives through the reduction of IPT, the equivalent of our VAT, but also thanks to its high capacity, particularly of Fiat, to continue offering the market new products in all segments. It seems also worth mentioning that the incentives were extended for part of 2013, although diminished and divided by class.

The projections in the medium term to 2015 give a market forecast of more than 4 million vehicles where, again thanks to government incentives in Brazil to bring know-how and design and production, certainly we will see new and further localization of the brands, at the expense of the ‘importers’ tout court.
So it seems that Brazil follows the strategy of China and, personally, I think that will be followed by all emerging countries with an interesting car market from the point of view of the volume and the relative growth (Russia and India).

This means producing in house to enrich the internal “know how”. This will mean, perhaps, the end of the export, at least for the “full-liner brands”, except for neighboring and countries with which there are agreements of commercial interchange constraints, as already do Mexico and Thailand!

And what will do our old European car industry, facing this scenario, heavily pushed by the economic crisis and the surplus of production capacity (already present even before the current crisis)? How it will react?

We express the hope in a spiritual and earthly way. The first, essential, as they say in Brazil ‘if Deus quiser’! The second, that the top managers and the properties of the companies in Europe will find a solution, possibly soon, for the sake of the future of the industries and their European workers…

(Translated by Raffaele Vincenti)

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  1. Júlio César Guedes says:

    Hi there,

    First of all, just correct the Brazilian expression in the last paragraph. It would be “Se Deus quiser”, which means in English “If God wants to”.

    Fiat is indeed the largest car maker in Brazil. It’s also the nearest factory to my town (Fiat factory in Betim, some 450km south of me), so, as a professor, we always take our students there for a visit.

    The brand is in Brazil since the late 70’s or early 80’s I think. The first car was the Fiat 147, a lousy weak-engined little beast, followed by the famous Uno. The Uno was the car that replaced the VW Bettle as the workhorse of Brazilian car fleet. Even so, Uno had it’s long and sad share of problems: weak engine, poor general reliability, very thin structure – it was simplicity at spartan levels. That reflected in the image of Fiat itself, which became known as a brand of weak and poorly-made cars.

    That only begun to change years after the debut of the Palio. It was a major change in leadership in the company, so they changed the projects and the logo. Everything to forget the old image. Some years ago came this red logo, burying even the traditional blue.

    Today Brazilian Fiat has cars of good quality in a variety of classes: New Uno, Doblò, Siena, Linea and others. Their car dealership in my town grew immensily in the last three years, and it’s the bigger one today.

    Our problem here in Brazil is that we don’t have infrastructure to handle all these cars. Car making is a major industry as it employs many people (and they have a powerful lobby), so the government has to keep them running high. The tax cut for cars is a recurrent strategy for sales increase. The problem is that our cars are still among the most expensive in the world. So even with tax cut, the discount is not really that big. The strategy tends to work in the end because credit in Brazil is very easy these days, and pratically everybody can finance a car in 60 months, let’s say – which is not a good thing to do due to the high interests in the end, but common people know nothing about interests.

    Next year, ABS breaks and air bags will be mandatory in Brazil, so let’s see how this will impact in the prices.

    From Brazil,

  2. paolo ferrero says:

    @ Júlio César Guedes:
    hi Julio, thanks for your comment.
    I agreed with your analysis, but about the brazilian infrastructure I would like to say that it will growth quickly like are making BH and SP , that I could visit last month, they are investing a lot of money!
    about new feature, like abs and air bags, the car company , as usual, will try to increase prices for manteining similar margin of contribution.
    um abbraço, paolo ferrero

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