In South America, sales of vehicles imported from China have been exploding. Across the region, our forecast shows that vehicles imported from China are poised to account for 24% of the total market in 2024. In Brazil, vehicles imported from China have been growing strongly and Chinese imports are anticipated to more than double year-on-year (YoY) in 2024. Many Chinese brands are trying to expand outside their domestic market and establish themselves as legitimate manufacturers alongside the traditional local players, with many South American markets proving to be desirable locations.
Chinese manufacturers have sold vehicles in various markets around the world, including Central and South America, for several years. These vehicles tended to fall into one of two categories: cheap cars with no frills that lacked the reputation of those from established manufacturers, or simple commercial vehicles. Nonetheless, having a presence in these markets helped to create brand recognition and acceptance.
In what might be considered a starting point, towards the end of the last decade some traditional OEMs took advantage of the low cost of building vehicles in China, jointly manufacturing (for export) several popular models with local partners, or simply re-badging Chinese models as another make. For example, the Baojun 530 model is built and sold in China, but it is also re-badged as the Chevrolet Captiva, and sold in multiple markets in South America.
While ICE vehicles continue to be imported, Battery Electric Vehicles (BEVs) are also gaining prominence. Even in the developing economies of South America, BEV and other low-emission vehicle targets are becoming part of government policy. Given the existing familiarity with Chinese brands, these markets present an opportunity for expansion, particularly in the BEV market, outside of China. Moreover, these vehicles are no longer the cheap, basic models previously sold; these BEVs, in many cases, are on par or above the traditional brands’ vehicles from a desirability standpoint but are still less expensive. BYD, now the world’s largest producer of plug-in vehicles, has started expanding throughout South America. Models such as the BYD Dolphin Mini (also known as the Seagull in other markets) and the Dolphin have risen from being the 326th and 50th best-selling vehicles in Brazil in 2023 to a projected 34th and 41st, respectively, in 2024.
Source: GlobalData
In addition to importing vehicles built in China, several manufacturers have announced plans to build them in Brazil: BYD has started construction of a facility in Brazil which is expected to produce 150,000 units per year; Great Wall is working to renovate a facility bought from Mercedes-Benz and expects to produce around 100,000 units per year there. There are numerous reasons why this could be appealing to manufacturers, but taxes on vehicles imported to Brazil are an important one. Normally, Light Vehicles have a 35% import tax when imported to Brazil; however, starting in 2015, electric vehicles had a 0% import tax. In recent years, Chinese brands have used this incentive to import many of their newest BEV models. The current government, on the other hand, has decided to end this incentive, with the import tax rising to 10% in January of this year, then 18% in July, with a further increase to 25% in July 2025 and finally 35% (the same as other vehicle types) in July 2026, making localisation more attractive. These new facilities will give easier access to the Brazilian market but also create a jumping-off point for other South American markets.
The synergy between South American markets and the new generation of Chinese-manufactured BEVs could be ideal: these markets are looking for desirable low or no-emission vehicles and the manufacturers are looking for accepting markets to help expand to a more global footprint. Once established in these markets, the opportunity to penetrate other larger markets would be enhanced. Despite resistance from North America and some European governments to the sale of these new-generation BEVs from China, establishing a foothold in South America could eventually lead to market penetration in these regions, as the vehicles would not be directly manufactured in China.
Kimberly Krafft, Analyst, Americas Vehicle Forecasts, GlobalData
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
“Soaring Chinese vehicle sales in South America: opportunities and challenges ahead” was originally created and published by Just Auto, a GlobalData owned brand.
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Publish date : 2024-09-05 05:34:00
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