The Brazilian automobile industry will see an investment of $5 Billion this year to maintain the current growth in the domestic market.
According to the president of Brazil automaker association, Associação Nacional dos Fabricantes de Veículos Automotores (Anfavea), Jackson Schneider, around $5 Billion will be invested in the country’s automobile industry in 2008 to enhance the capacity and to maintain the domestic demand, as reported by Reuters.
Anfavea also revealed that the auto industry and its related auto parts industry will together make an investment of $20 Billion by 2010. Citing the growing investment in the industry, experts predicted that production will rise from 3.5 Million units in the beginning of 2008 to 3.8 Million units by the end of this year.
According to the industry experts, steep rise in investment into the Brazilian automobile is driven by fueling demand for automobiles in the Latin America’s largest nation. Auto makers are riding high in terms of production as well as sales on the back of declining interest rates, rising expense capacity of consumers and flourishing economy. The investments are being made with the confidence that the market will grow in future.
Moreover, the biofuel industry of Brazil is also supporting its automobile industry and creating demand for more vehicles. The ethanol fuel, prepared from sugarcane juice by distilling, costs 60% cheaper than gasoline at fuel stations. As a result, people can now afford to buy and maintain vehicles.
Adoption rate of flex-fuel cars that run on the mix of ethanol and gasoline has also improved in the country, smoothing the road for Brazilian vehicle industry. Currently, 5 Million and around nine out of ten vehicles in Brazil run on mix of ethanol and gasoline.
Moreover, disposable income of Brazilians has significantly gone up and employment rate is heading upward too, making it a status symbol in the country to own a car. On the other hand, Brazil’s young generation, which is more style-conscious, is giving a lot of importance to two-wheelers, thereby boosting the growth of this segment.
According to a Research Analyst at RNCOS, “Brazil’s economy is growing and changing the living standard of people. Now people are ready to expend on vehicles. Besides, favorable business conditions for automakers and investors are also boosting growth in the automobile industry of the country.”
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