SEMA News—March 2012
By Linda Spencer
A Market on the Rise
Brazilian trade and consumer shows are well attended and growing, and organizers are increasingly seeking to showcase customizing options.
• Local interest in and passion for customizing
• Size of the population
• Vehicle sales and the number of vehicles on the road
• Disposable income, discretionary dollars and other economic factors
• Perception of U.S. products
In the follow-up article next month, we will look at:
• Laws regarding customization
• Tariff rates and costs associated with getting U.S.-manufactured products to Brazilian customers
• Distribution system
As in the U.S., motorsports has a firm place in the hearts of Brazilian citizens, and its racers have achieved world-champion status. Brazil has produced three Formula One world champions, including Emerson Fittipaldi, Nelson Piquet and Ayrton Senna. The Brazilian Grand Prix has been on the Formula One calendar since 1972, with the São Paulo Interlagos venue on the fall schedule. Brazil is also home to Indianapolis 500 winners Fittipaldi, Hélio Castroneves and Gil de Ferran.
Televised events are increasingly popular, with “Stock Car Brasil” and “Fórmula Truck” being broadcasted nationally. Drag racing is also popular and exists throughout Brazil in many cities in the countryside of Sao Paulo such as Limeira, Artur Nogueira, Campinas and Piracicaba as well as in big cities such as Fortaleza, Recife, Rio De Janeiro, Belo Horizonte, Londrina, Santa Catarina and Vitoria.
“There are about 500 professional racers who invest a lot of money in their cars and travels to races,” said Edu Bernasconi, editorial director of Fullpower magazine. “Amateur races are also becoming very popular nationwide. Every state with a racetrack is organizing races to take the kids off the streets. In 2012, we’re helping some state federations to hold races at regional racetracks.”
The market for restoration, classic cars, musclecars and hot rods is also growing more popular. Discovery Channel’s “American Hot Rod” was well received in Brazil and, said Bernasconi, “Good painting for old cars and newly imported wheel brands have shown consumers that it’s possible to get a unique car. And this uniqueness is easier to get with an old car. Manufacturers of steering wheels, columns and pedals might do well coming into and supplying this segment of the market.”
Bernasconi said that restoration is currently popular and that cars from the past are cooler than ever. He added that musclecars as well as old European vehicles are all the rage, and sales of current-model musclecars have grown so popular that Chevrolet has finally launched the Camaro officially in Brazil. Chevrolet cars had previously been sold by independent dealers.
This car-passionate country publishes numerous tuner, hot rod, off-road, racing and car-collector publications. Below is a sampling of these magazines, all of which were represented in recent years on the SEMA Show’s Global Media Awards panel. They include:
Racing is popular in Brazil on many different levels, from Formula 1 on down to a local amateur level. Many of the vehicles available in Brazil are equivalent to North American models, and the “Made in America” mark is considered a sign of quality and innovative design.
Car Stereo Professional
Brazilian trade and consumer shows are well attended, and the most well known is the consumer show X-treme Motorsports, a biennial event held in Sao Paulo that is now in its sixth edition and is reminiscent of the first SEMA Shows. Indeed, the show’s organizers are looking for the event to grow and increasingly showcase customizing options.
“Our main goal is to grow the show to 150 companies in the 2013 edition,” said Bernasconi, who is the founder of X-treme Motorsports.
With a inhabitants totalling nearly 200 million, Brazil boasts the largest population in the southern hemisphere and is now ranked fifth in the world. In this country that is nearly the size of the U.S., the majority of the inhabitants live in the south-central area, which includes Sâo Paulo and Rio de Janeiro. Sâo Paulo is one of the largest cities in the world, with 20 million people living within the greater metropolitan area.
The Vehicle Market
With 3.4 million passenger vehicles sold in 2011, Brazil is now the fourth-biggest car market in the world. It overtook Germany in 2010, and many envision Brazil increasing this strong growth and overtaking Japan to claim the world’s third-largest market within three to five years. More and more Brazilians want the transportation freedom that comes with owning a vehicle as they experience rising prosperity. This extraordinary growth may continue, as sales reflect currently unmet demand and the ratio of people to vehicles increases from the current one vehicle for every seven people and closes the gap with the U.S., which has one vehicle for every two citizens. JD Powers predicts annual sales will double to six million in 2018.
Consumers need disposable income to purchase specialty parts and grow the tuning market in Brazil. Fueled by low unemployment rates (currently a new historic low of 5.8%) and a fast-growing economy, all indications point to an improvement in the purchasing power of Brazilians. The number of people entering the middle class is surging, and continued progress is expected in the short term. Between 2003 and 2009, 35 million people became part of the middle class in Brazil, and 20 million more are expected to attain that distinction by 2014, further reducing the historic yawn between the nation’s rich and poor.
“What is happening in Brazil is very different from what is happening in other BRICs [Brazil, Russia, India and China] in the sense that what is booming in Brazil is the bottom of the income distribution,” said analyst Marcelo Cortes Neri, chief economist of Centro de Politicas Sociais at the Getulio Vargas Foundation. “Consumer demand for cars as well as all consumer items such electronics and luxuries is increasing at a fast clip.”
Perception of American-Made Products
The “Made in America” mark is considered a sign of quality and innovation among global consumers. Local enthusiasts are increasingly aware of and deliberately seek U.S.-branded products. TV shows such as TLC’s “Overhaulin’,” MTV’s “Pimp My Ride” and Universal Studio’s The Fast and the Furious films also played a great role in generating interest in American-style tuning. As brand awareness and education among consumers and the trade continues in both markets, U.S. brands are bound to benefit.
Several resources are available to the automotive specialty-equipment companies that are interested in the Brazilian market, including:
• The Brazilian-American Chamber of Commerce
• The U.S. Commercial Service in Brazil
• The Embassy of the United States in São Paulo
• ACEB (the Brazilian Business Trade Association)
• Trends of Doing Business in Brazil in 2011