Market Overview

Road Equipment

The first commercial trailer manufacturers in Brazil were founded in the early 1950s. The industry comprises more than 1,000 small, medium and large companies, most of which are family-owned, responsible for the manufacturing of road equipment with different configurations and profiles.

Since its inception, Brazil´s commercial trailer industry had to manufacture products tailored to the specific characteristics of the country´s road system, which includes unpaved roads or poor roads.

The growth in the primary, manufacturing, retailing and services sectors had an impact on the development of the commercial trailer industry.

The commercial trailer industry develops accessories and complementary vehicles for road tractors that give them a role in cargo transport. The industry produces trailer vehicles, especially trailers, semi-trailers, superstructures and accessories, including dump and van trailers, auxiliary axles and fifth wheels. The industry´s versatility enables it to offer a full range of products, offering equipment of all sizes and specifications in terms of sophistication, quality, durability, etc.

Brazil is the world's fifth-largest country by both area and population and counts with approximately 1.75 million kilometers of roads, the fourth-largest in the world. It is also one of the most important auto markets in the world, with a fleet of more than 90 million vehicles, as shown in the table below.

Fleet and percentage of vehicles, by type – DEC/2015

TYPE FLEET % of TOTAL
PASSENGER CARS 49,822,709 54.94%
TRUCKS 2,645,992 2.92%
TRACTOR TRUCKS 593,892 0.65%
LIGHT COMMERCIAL VEHICLES 9,497,046 10.48%
MICRO BUS 375,274 0.41%
MOTORCYCLE 20,216,193 22.29%
BUS 590,657 0.65%
TRAILER 1,296,184 1.43%
SEMI-TRAILER 873,106 0.96%
OTHER 4,775,883 5.27%
TOTAL 90.686.936 100%

FONTE DOS DADOS:
DENATRAN – National Transit Dept. RENAVAM – National Registration of Vehicles

Brazil’s cargo transportation matrix is greatly dependent on roads. Trucks and trailers account for more than 61% of all goods moved in the country. The second most important one is railroads, which is responsible for another 21% of the share. The remaining 18% correspond to the other modes of transportation, such as those done by water, air or ducts.

The graphic below shows the transportation share by mode:

 

 

The commercial trailer industry is very heterogeneous in terms of technology, with some companies making high-precision and high-technology products and others producing "commodities". The structure of the commercial trailer industry has become increasingly horizontal, with increased outsourcing of parts and components production, similar to the path the automaker industry has taken.

The main inputs used by commercial trailer manufacturers come from the steel, metal, petrochemical (plastic), wood sectors, usually purchased in the domestic market.

Commercial trailer exports still represent a very small share of the revenue of manufacturers. This is due to the customization required in each market given the special features of each country’s legislation and the logistic difficulties associated with the transport of trailers and semi-trailers. One of the alternatives found by these companies of to overcome this problem is exporting using the completely knocked down (CKD) system. The main export markets for Brazil’s commercial trailer manufacturers are countries in the Mercosur region, Africa and the Middle East.

Brazil’s Railcar Industry

Brazil’s first railcar companies were founded in the 1940s. Railcars is one of the oldest sectors of the country´s capital goods industry, and its growth follows the path of Brazil´s rail transport industry, which has fluctuated between high growth in installed capacity and high rates of idle capacity.

Today, rail transport in Brazil has been undergoing profound changes, with the private-sector now operating rail transport services, especially cargo transport.

Although Brazil´s transport matrix relies primarily on road haulage, many companies in this industry are seeking to diversify their revenue sources, providing solutions involving other modes of transport.

Rail transport is especially good for transporting large volumes with high levels of energy efficiency, especially over medium and long distances. It is also safer than highway transport, with lower accident rates and fewer incidents of theft. Cargo typically transported by rail includes mainly iron ore (75%) and grains (15%) of the total.

Following the privatization of railroads that began in the mid 1990s, most railroad concessions in Brazil are controlled by four groups:

  • VLI Multimodal S.A.;
  • Vale S.A.;
  • MRS Logística S.A.;
  • Rumo Logística Operador Multimodal S.A.

The return of investments in the rail freight sector led to reactivation of the railcar industry, chiefly to supply the demand for this type of transport, driven by the lower costs compared to road transport and growing exports in the steel, mining and agriculture sectors, which regularly use rail transport.

Autoparts and Automotive Systems

The 1990s were a landmark in the Brazilian autoparts industry. The opening up of the auto industry to vehicle imports led to substantial restructuring in the industry, resulting in demand for higher quality, better trained personnel and production planning. A few family-owned companies opted for professional management or joint ventures with international players, while others divested to foreign groups.

There are around 30 vehicle manufacturers in Brazil. The automotive and auto parts industries were pioneers in globalizing production by adapting their models to international standards and distributing their production operations around the world, thereby minimizing costs and standardizing quality.

The auto industry has also been outsourcing part of its production, leading vehicle manufacturers to concentrate their efforts on strategic operations like design, final assembly and brand recognition, while transferring a larger number of operations to vendors. As a result, autoparts manufacturers are responsible not only for a bigger share of the parts used in automobiles but also for subassembly operations, supplying assembled systems instead of individual parts, as previously. This has led to a closer and lasting relationship with auto manufacturers as well as a reduction in the number of direct suppliers in the auto industry.

Brazil´s autoparts industry consists of around 500 small, medium and large companies. Despite the high number of companies in the industry, only a few players dominate the high value added segments like engines and transmission systems.

The performance of the auto parts industry is highly influenced by the performance of the auto industry, which increasingly seeks to develop in the country by installing local plants. In the aftermarket, there is strong correlation with the level of economic activity.

The principal inputs used by auto parts manufacturers come from the metal, petrochemicals (plastics), glass, rubber, wood and electronics industries and are largely sourced in the domestic market. The exceptions are higher value added electronic and mechanical components, for which Brazil is still highly dependent on imports.

Auto parts exports were initially indirect, i.e. through exports of completely assembled vehicles. Over time, this process created an export aftermarket. Direct exports have become increasingly important, creating a more stable market for the auto parts industry. The principal auto parts imported by Brazil are those with high technological content.

The opening up of the industry to imports resulted in greater emphasis on quality, trained personnel and production planning. In the mid 1990s, the industry invested considerably in modernizing its production infrastructure and has done so since then as a way of keeping up to date with the best practices and players in the world.

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