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Booming Brazilian Market Benefits Automakers

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On: Wed, Sep 1, 2010 at 9:26AM | By: Sherry Christiansen

Booming Brazilian Market Benefits Automakers

Ford Motor Company considers its Camacari plant in northern Brazil to be its most progressive. Why? It’s the plant where the subcompact EcoSport SUV and Fiesta are manufactured. Ford’s suppliers work side by side with the autoworkers to build the vehicles in a most efficient method. The plant built over 200,000 vehicles in 2009.

Ford is investing millions of dollars in a new engineering center for subcompact cars at the Camacari plant. Ford has added close to 1,300 engineers to its Brazilian manufacturing plant in the past two years in an effort to ramp up its operations there.  

According to Jim Farley (Ford’s vice-president of global marketing), "Brazil is incredibly important to the company." Farley also stated: "It could be in the top couple of countries in Ford's world in terms of vehicle sales."

Ford Motor Co. places a high value on its Brazilian plant, not only for its growing product development proficiency, but also for the profit it generates for the company. Ford executives say that the profits from Ford’s South American operation was a major factor in enabling Ford to avoid taking federal bailouts in 2009.

The Brazilian market is positioned for tremendous sales growth; in fact, this year Brazil could replace the United Kingdom to become Ford's second-largest market in terms of sales (after the United States). Last year South America generated $765 million in income for 2009, compared with Europe's $86 million.
Why Brazil? A rapidly increasing middle class, a strong currency, and plenty of employment opportunities are increasing the demand for vehicles, especially subcompacts. The country's gross domestic product is predicted to go up 7.2% this year.

Many analysts are predicting that in about 10 years Brazil, Russia, India, and China will have a larger automotive sales volume than the United States, Europe, and Japan combined, according to Guido Vildozo, an auto analyst.

1.8 million light vehicles were sold in Brazil last year. Brazil's light-vehicles sales are expected to rise to around 3.15 million this year.
"We have a market that has grown by 50 percent in about five years despite a great recession globally," Vildozo says. "We're looking for significant investment by all manufacturers."

"One of the things that Brazil does better than any other operation in the world is integrate the service experience with the marketing of the vehicle," Farley says. "So the dealer and company advertise the car as well as their service program at the same time. It's completely integrated."

Vildozo adds, “Ford isn't alone in adding capacity in Brazil. Automakers will invest about $16 to $20 billion there by 2015.”

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