Enjoy a 15% discount on all purchases until the 31st of March 2023 using the promo code EOFWEB22 at check out!

Services Our expert insights reveal the key consumer and industry trends shaping global services, including best-in-class innovations in technology, customer experience and sustainability to thrive in dynamic times.

Premium Carmakers Invest in Brazil - What Took Them So Long?

Euromonitor International Profile Picture
Euromonitor International Bio

Brazil does not have indigenous car brands that consumers are inclined to buy because of a sense of national loyalty. However, many foreign OEMs such as FIAT, Ford, GM and VW are so well established in the country that they are invariably seen as Brazilian. Furthermore, the industrial production tax (IPI) and duties imposed on imports mean premium cars are not competitively priced and hence why their share of the market peaked at just 1.5% in 2011 before contracting to 1.1% following a hike in the IPI. This therefore explains why, even at the record level recorded in 2011, premium light vehicle sales equated to just 1% of households with annual disposable income over US$55,000. To put this into perspective, however, premium car sales consistently equate to more than 10% of the number of these households in South Africa and China.

Euromonitor forecasts that there will be 64% more such homes in 2020 than in 2013, nudging 10 million. This is about half as many as in Germany and so it is understandable that BMW, Mercedes, Audi and Jaguar Land Rover are now all looking to invest in local assembly in Brazil in order to be able to bring prices down to competitive levels and thus tap into the long-term market potential. Interestingly, similar to Brazil, premium-brand light vehicle sales only equate to 1% of the number of households with over US$55,000 annual disposable income in India. However, a notable difference is that premium demand grew more than tenfold over the period from 2006 to 2012 in India, underpinned by just a 50% expansion of the number of sufficiently affluent households in the country.

Premium Light Vehicle Sales in Brazil and India, 2005-2012

Source: JATO Dynamics, Wards Auto

This is fundamentally because of the investment in local assembly in India by car companies such as BMW, Audi and Mercedes in order to circumvent high import duties and thus serves as a positive indicator for the potential in Brazil. In fact, there have always been twice as many affluent households in Brazil as in India, which begs the question as to why investments by the premium carmakers have been far more forthcoming in India than in Brazil.

Households with Annual Disposable Income Over US$55,000 in Brazil and India, 1991-2020

Source: Euromonitor International

Interested in more insights? Subscribe to our content

Latest Insights

Loyalty and the New Normal

Nadejda Popova 16 March 2023

World Travel Market Africa

Euromonitor International 14 March 2023

Shop Our Reports

Car Rental: Top Six Industry Trends

This report examines the global car rental industry, providing analysis on market sizes, brand and company shares, growth trends over the review period and…

View Report

Financial Cards and Payments in Western Europe

Electronic direct/ACH and card payments continue to take share from paper transactions in Western Europe, while mobile m-commerce continues to be the most…

View Report

Financial Cards and Payments in Latin America

Although it is not the case in Brazil, the region’s biggest market, cash is still the leading payment method in many Latin American countries. However,…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More