BRAZIL’S RECORD-BREAKING AUTOMOBILE DEMAND: CAN SUPPLY KEEP PACE?

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Published at: tendencias.infoamericas.com

Better conditions for local Tier 2 and 3 to invest are key for a competitve automotive industry

November 7, 2007

Analysis by: GLG Expert Contributor

According to Sindipeças, the autoparts Assotiation in Brazil, in 2006 80.9% of the investment were made by multinational subsidiaries installed in the country. Considering that 80% of Tier 2 and 3 suppliers are mostly  Brazilian family owned companies , it can be seen that those companies did not have acess to cheap money to invest in increasing productivity and/or modern new technologies. The autoparts Trade balance Jan to August 2007 shows by the first time in many years that Brazil is importing more than exporting. Exports were at the level of 5.886 Bi US$ being stable in the last 2 years, while imports increased more than 20% to the level of 5.895 BiUS$. Vehicle OEMs had to import more parts in order to keep in pace with a more sofisticated market aiming to have better and more efficient products. It is imperative that conditions are created in order the local supply base to have access to similar capital cost of their competitors in the rest of the world.

Brazil’s Supplier Management Dilemma.

August 21, 2007

Analysis by: GLG Expert Contributor

After some 10 years of painfully slow growth and inflation, Brazil is seeing an unexpected revival. Is this growth sustainable? What about the complete supply chain? Will Tier2s and 3s be able to cope with this increased demand?