Since mid-2023, several Brazilian auto-makers have announced new investment cycles aimed at launching new models and developing and producing electric and hybrid vehicles in the country.
The latest announcement came from the mouth of President Luiz Inácio Lula da Silva, who said that Korean manufacturer Hyundai plans to invest more than USD 1.1 billion in Brazil by 2032, after meeting Hyundai Group chairman Eui-Sun Chung at the presidential palace on February 22.
Other automakers have made similarly bold pledges. Volkswagen, for example, more than doubled its investment plans for the 2022-2028 cycle to BRL 16 billion (USD 3.2 billion) earlier this month.
This follows the new phase of the government’s Mover program for the sector to produce safer and less-polluting cars, which includes BRL 19.3 billion in tax incentives over the next five years.
In total, the automotive sector plans to invest BRL 41.4 billion in Brazil by 2032, according to the federal government’s calculations — the amount that could become even more significant in the coming days, when Stellantis, the parent company of brands such as Peugeot, Citroën, Jeep, and Fiat, is expected to announce its new investment cycle.
Unlike previous cycles, however, these new investments will not result in increased production capacity or job creation. In fact, the country’s industrial production capacity is still below pre-pandemic levels.
According to Anfavea, a manufacturers’ association, Brazil’s manufacturing park produced only 2.3 million units in 2023 — 1.9 percent less than in 2022. That is well below its capacity to produce 3.6 million vehicles and pre-pandemic levels (in 2019, the Brazilian auto industry churned out 2.7 million cars).
And this is a worldwide phenomenon. In early 2029, S&P’s Global Mobility forecast — issued before Covid — expected sales and production around the world to exceed 100 million units annually by 2022. S&P does not expect this milestone to be reached until 2030.
Job creation has been on a downward trend for some time, given the increasing level of automation in the sector. Between 2022 and 2023, the number of jobs in the Brazilian auto industry dropped by 2.9 percent to 98,900 — also well below the 125,600 recorded in...
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