However, the size of the automotive specialty-equipment market has not grown at the same pace.

In last month’s first installment of this two-part series on Brazil, SEMA News explored what drew the industry to this country in the first place—an enthusiastic motorsports and customizing market that has growing passion for hot rods, classic cars, off-roading and racing. And it is home to the fifth-largest populace in the world, with 200 million people.

In the last issue, we also revisited some of the hurdles that were hampering the growth of the market. We reported that there have been some very positive developments since SEMA’s first visit to the country in 2005, including the growth of a middle class, enabling enthusiasts to have growing buying power to purchase specialty products. In addition, interest rates are down from a high of more than 20%, enabling consumers to finance their vehicle purchases and aftermarket parts.

Two other rather steep hurdles still remain. Brazilian-imposed tariffs and taxes make U.S. auto parts expensive, thus threatening to make U.S. products unaffordable. In addition, vague or restrictive laws governing vehicle customization further stunt the growth of this market.

	Ford recently previewed the all-new Ford EcoSport, a compact SUV designed to attract a new generation of consumers in global markets, including Brazil. See “Automobiles in Brazil” for a list of other popular Brazilian platforms.

Most of the taxes are calculated on a cumulative basis. The tariff rate is common to the countries in the Mercosur (an economic and political agreement between Argentina, Brazil, Paraguay and Uruguay), though the added taxes are country specific. Yet some SEMA members have found a way to mitigate these added costs. The dollar is currently weak compared to the Brazilian real, making U.S. products less expensive and thus partially compensating for the tariffs and other fees.

“One of the ways to exploit the market is to bring the products in through the Free Zone in Montevideo, Uruguay, and then export from there to Brazil as part of Mercosur,” said Jeremy Barras, president of Advanced Performance Parts Inc.

The other challenge those seeking to sell into the market face is that the laws regarding customization remain quite onerous, but a new Brazilian specialty-equipment association will come on line in the first part of 2012 to address the issue. The association, to be called Associacao Brasileira de Acessorios Automotivos (Brazilian Association of Automotive Accessories, or ABAA) will include manufacturers, importers, distributors, performance shops and publishing companies as its founding members.

“The laws must be changed to make consumers more comfortable accessorizing and customizing their cars,” said Eduardo Bernasconi, the association’s founder and editorial director of Fullpower magazine. “Right now, you can tune up your engine and increase performance by only 10%. ABAA will talk to local legislators and governments to change it and leave a free performance level and work on emissions to have cleaner modified cars.

“Suspension has some limits as well. We’ll try to show the government that a consumer can have a safe modified suspension, higher or lower. Our mission is to work with the legislation, to get it more clear to the consumers, help the people who write laws to understand our market and consider it before changing or making new laws, work to get all the modified, vintage, classic and muscle cars to be driven under laws that recognize these vehicles.”

Bernasconi noted that consumers are customizing even with the tight regulations. He identified the products most in demand as wheels, tires, audio systems and lowered suspension. There is also demand for performance items such as ECU reprogramming, high-flow air filters, exhausts and turbochargers.

For more information about SEMA’s international programs, contact Linda Spencer at lindas@sema.org or visit www.sema.org/international.

Automobiles in Brazil Top 10 Cars Volkswagen Gol Fiat Uno/Mille Chevrolet Celta Chevrolet Corsa Volkswagen Fox Fiat Palio Fiat Siena Volkswagen Voyage Ford Fiesta Renault Sandero Source: Federacao Nacional da Distribuicao de Veiculos Automotores

SUVs Ford Ecosport Hyundai Tucson Mitsubishi Pajero Honda CRV Chevrolet Captiva Kia Sorento Renault Duster Kia Sportage Toyota SW4 Hyundai SantaFe

Trucks (Small and Medium) Fiat Strada Volkswagen Saveiro Chevrolet Montana Chevrolet S10 Toyota Hilux Mitsubishi L200 Ford Ranger Nissan Frontier Volkswagen Amarok Ford Courier

The Brazilians are starting a new association to represent manufacturers, importers, the media and distributors in that country. The top goal of this new group will be to work with regulators to ease the restrictions on vehicle modification. Pictured here is the new logo of the group which will include 17 founding members.