Automakers target 2023 with investments of BRL 20.9 billion

The automakers installed in Brazil are already in 2023. Investments announced in the last three months total R$ 20.9 billion and show that the industry sees the recovery beyond a turbulent start to the year.

The largest investment was announced in January by China’s Great Wall (R$ 10 billion), which will produce hybrid and electric cars in Iracemápolis (São Paulo), at the factory that belonged to Mercedes-Benz.

It is surprising to hear the automotive sector speak of high figures in a year of majority elections, when companies tend to slam on the brakes in the face of uncertainty, but this industry has its own cycles and interests.

“The Great Wall is making a long-term investment and acquired a factory already installed. They came here and bought in a low season, with the real greatly devalued”, says Cassio Pagliarini, partner at Bright consultancy.

“The Chinese are looking to the future, and it pays to make this investment. If they want to grow globally, they need the volume from Brazil, which will not always remain in these 2 million [de unidades vendidas].”

The specialist believes that the domestic market will return to the level of 3 million units by 2030, and those who invest now have this long-term vision.

But if the portrait of the moment were a parameter to define investments, perhaps companies lacked courage. According to Anfavea (association of automakers), the production of light and heavy vehicles in January fell by 27.4% compared to the same month in 2021. The result was influenced by the effects of the ômicron variant on the assembly lines and by collective vacations .

The entity believes that the GDP (Gross Domestic Product) will grow by 0.5% in 2022 and projects a growth of 9.4% in manufacturing, with 2.46 million units coming off the assembly lines. As automakers divide the world into macro-regions, the vision of recovery is not limited to Brazil.

Reiner Braun, president of the BMW group in Latin America, sees a 2.5% growth in GDP in Latin America. The brand is experiencing a good global moment, having registered a 98.4% growth in sales between 2020 and 2021.

In November, the German automaker announced a new investment in the Araquari (SC) plant. BRL 500 million will be invested between 2022 and 2024 for the production of the X3 and X4 utilities, in addition to a model that is yet to be revealed in Germany. The brand has already invested R$ 1.8 billion in local production since 2014.

Pagliarini explains that, in the case of BMW, increasing investment in local assembly must have been a decision taken after considering the impacts of reducing taxes through greater nationalization of its operations. This is one of the incentive points provided for in the Route 2030 program.

Competitor Audi is also moving. After remaining at a standstill throughout 2021, the German automaker will restart vehicle production in São José dos Pinhais (PR).

The resumption is scheduled for the beginning of the second half of 2022, with the assembly of the Q3 and Q3 Sportback models. The amounts invested have not yet been revealed, but the company announced that it will spend R$ 20 million on the installation of charging points for electric cars at its dealerships.

But the example of Audi shows how complex it is to bet on the national industry. The reopening of the factory was linked to the receipt of a debt generated during the Inovar-Auto program, which ran from 2012 to 2017.

The amount should be paid by the government as a refund of taxes. Of the approximately R$ 300 million withheld since the Dilma administration, between 70% and 80% were owed to Audi.

In December, during the announcement of the resumption, the then president of Audi in Brazil, Johannes Roscheck, said that it was not easy to convince the matrix. The payment of the debt is still under negotiation.

Despite the country’s snags, the market’s potential and growth expectations force brands to think about the future.

“Automakers’ investments are never short-term, long-term scenarios are always analyzed, as well as returns in the same time”, says Milad Kalume, business development manager at Jato Dynamics Brazil.

“The rising dollar facilitates investments here, as the country becomes ‘cheap’. Other announcements will certainly come, and soon.”

In the heavy vehicle segment, the investments are easily explained. The sector is experiencing a good moment due to the results of agribusiness and mining, in addition to the demand for delivery services.

Volvo, Iveco and DAF made recent announcements, which add up to approximately R$ 3 billion in contributions.

Manufacturers are also moving to meet the next stage of the Proconve (Vehicle Emissions Control Program) for heavy vehicles, which comes into force next year.

Another point that will stimulate investments is the Finame Baixo Carbono program, from BNDES (National Bank for Economic and Social Development).

The credit line facilitates the purchase of vehicles and machinery powered by electricity, a hydrogen cell or biofuel, such as natural gas and ethanol. When generating increased demand for these products, automakers will have to find ways to nationalize less polluting cars.