Brazil Is Now Fiat’s Largest Market

By Brendan Moore
 
01.27.2010
 
Fiat Group logo smallFiat has been making motor vehicles for 111 years, and in each one of those years, Italy has been Fiat’s largest market, but not any more.

The Italian automaker sold almost 750,000 vehicles in Brazil last year, a 12.6% gain from 2008’s numbers. Fiat’s sales in Italy grew only .5% to 722,000 units.

Fiat is the No. 1 auto manufacturer in Brazil, as it has been for the last eight years in a row, with VW and GM snapping at its heels in the No. 2 and No. 3 spots respectively.

Fenabrave, the national dealership association of Brazil, says that Brazil’s car and light commercial vehicle sales jumped 12.7% to a record of more than 3 million combined in 2009. Showing roughly equal increases by category, passenger-car sales in the country increased 12.6% to 2.52 million units as light commercial vehicle sales climbed 12.3% to 489,900 units.

Brazilian auto sales in 2009 were spurred by ever-increasing demand from Brazil’s rapidly-growing middle class, a good national economy compared to other parts of the world, and, importantly, federal tax cuts on the sale of new vehicles.

The Brazilian market, part of the BRIC (Brazil, Russia, India, China) group of rapidly-growing new auto markets in the world today, is expected to grow at an average rate of around 3% per year for the foreseeable future. It is expected that Brazil will be Fiat’s top market for the next few years at least.

And it’s a welcome development at Fiat, which lost $1.2 billion USD in 2009, all as a result of the poor global economy knocking the stuffing out of the “mature economy” countries in Europe, where a great deal of Fiat’s volume comes from.

Fiat, however, has a strong position in every BRIC country, which, together, are expected to account for a third of all global auto sales as early as 2014. In addition, Fiat’s light truck subsidiary, Iveco, is also establishing a strong presence in the BRIC countries, and then there’s machinery maker Case New Holland, another Fiat subsidiary, which makes just what the economist ordered for developing economies that have large rural regions.

Then, of course, there is a “free option” as market analysts put it, on the recovery of the United States auto market, that Fiat has as a result of being handed the reins of the recently-bankrupt Chrysler by the United States federal government. Fiat didn’t spend any of their own money getting Chrysler, and has only upside if the American new-vehicle market recovers. The relative worth of that free option is quite difficult to gauge at this time, but it could be quite beneficial a few years from now, and also make the US market a contender for the No. 1 region spot for Fiat sales in the future.

For now, however, that market is Brazil, where Fiat sees only sunny skies ahead.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. Interesting that the Japanese manufacturers for the most part do not have a strong position in most of these BRIC countries.

    Do they assume they can always catch up when need be?

  2. Well put about Fiat and Chrysler.

  3. I didn’t know Fiat owned Case New Holland. In fact, I didn’t even know that Case and New Holland had merged.

  4. …or that Case and New Holland were even still around. Terms I haven’t heard since I was on my grandfather’s farm as a child. Go Fiat.

  5. Fiat owns Avtovaz more or less in Russia, they’ve got a great JV in China, a very good JV in India, and the top spot in Brazil. Fiat’s got to be feeling good about their future in the developing economy countries.

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