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TheStreet Open House

South American Auto Market To See Significant Growth By 2025

Stocks in this article: IHS

The South American automobile market will grow significantly by 2025, becoming one of the top three growth markets globally for light vehicle sales and presenting opportunities for improvements in fuel efficiency and reduced CO2 emissions, according to a forecast by IHS Automotive, the leading provider of comprehensive content, expertise and insight on the global automotive industry.

IHS Automotive forecasts that nearly 2.3 million additional vehicles will be sold in South America by 2025, equal to the output of 10 modern assembly plants. Most of the growth will occur in Brazil, followed by Argentina and Colombia.

Brazilian lawmakers late in 2012 enacted legislation providing tax benefits aimed at encouraging manufacturers to improve vehicle efficiency and reduce carbon emissions, and increase local research and innovation. Brazil Ministry of Trade and Industrial Development (MDIC) hired IHS Automotive Consulting to help them understand the growth potential under the new law and provide guidance on how Brazil could significantly improve the fuel efficiency of Brazilian vehicles and reduce CO2 emissions by 2017.

Paulo Cardamone, Managing Director, IHS Automotive Brazil, says, “The new automotive regime will promote green technology, help Brazilian consumers by significantly improving the fuel efficiency of light vehicles and, in the process, make Brazilian vehicles technically competitive with those in Europe, the U.S. and Asia. Brazil can become a net exporter of vehicles in the not too distant future.”

There will be a significant increase in demand for utilization of new green technologies to support Brazil’s new program for Incentive of Technological Innovation of the Production Line of Automotive Vehicles (INOVAR-AUTO), Cardamone says, adding that key technologies like direct injection, turbo- and super-charging, stop/start, advanced multi-speed transmissions, roll resistant tires, light weighting and many other related technologies will be in demand.

Paul Haelterman, Vice President of IHS Automotive Consulting, says, “These innovations will lead to a rapid improvement in the automotive industry and, more importantly, the lives of every day Brazilians, whether they drive a car or not, as this will be a huge contributor to reduced pollution levels in Brazil.”

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