IHS Automotive forecasts the launch of around 55 new vehicles in the Brazilian market in 2017, including all-new versions of existing nameplates and additive entries. This compares with 40 new-vehicle launches expected in Brazil in 2016, the third consecutive year of double-digit percentage sales declines.
Significance: A review of IHS Automotive's sales and production forecasts shows that automakers will launch about 55 new vehicles on the Brazilian market in 2017, including full model changes and additive products.
Implications: IHS Automotive forecasts that these vehicles will contribute about 286,000 units to the market's volume in 2018, once each has a full year of production, reaching 366,000 units in 2021. Many of the launch products will be niche entries, however, and the top ten vehicles are forecast to add 246,000 units in 2018.
Outlook: Although the Brazilian market has struggled over the past few years, IHS Automotive forecasts a return to slow growth in 2018. By 2021, the market is forecast to see annual sales reach 2.37 million units − not near the peak of 2012, but much more than the 1.88 million units forecast for 2018. Among the most significant launches due in 2017, from a volume perspective, are the Fiat Palio and Grand Siena, Volkswagen Gol and Voyage, Honda WR-V, and Renault Kwid.
IHS Automotive forecasts about 26 new cars and 23 new sport utility vehicles (SUVs) will be launched in the Brazilian market in 2017, as well as several light commercial vehicles (LCVs). The ratio of SUV launches to car launches is of interest as the Brazilian market has been slower than many other automotive markets in adopting the SUV body type. According to IHS analyst Augusto Amorim, the growing demand for SUVs has been evident in Brazil, although OEMs in the country have largely ignored the segment, with the Ford EcoSport being one notable exception. At this point, however, we are seeing production of affordable SUVs in the region, along with continued supply of the larger, expensive and imported offerings.
During January−July 2016, sales of SUVs in Brazil were flat, growing 0.1% year on year (y/y) to 164,367 units, which can be considered a success, compared with a light-vehicle market decline of 24.4%. SUVs' market share in Brazil increased to 14.6%% over the first seven months of this year, compared with 11.0% during the same period of 2015. By comparison, SUVs accounted for 38% of light-vehicle sales in the United States during January−July 2016. The trend towards SUVs has also been relatively slow in Argentina, where SUVs accounted for 11% of light-vehicle sales in January−July 2016. While Brazil is forecast to continue to adopt SUVs more slowly than many other markets, IHS Automotive forecasts SUVs will account for 20% of Brazil's light-vehicle sales in 2021. SUVs are forecast to be a growing segment and a carefully watched trend in Brazil, as in other markets. In the meantime, the launches planned for 2017 will favour cars in terms of sales volume and number of entries.
Significant launches in 2017 will include an updated Volkswagen (VW) Gol and the new Renault Kwid. However, as the A-segment has struggled in Brazil, there is concern about overall success for the Kwid. The VW Gol is offered at an entry price, but is sized in the B segment. Renault is countering this issue by positioning the Kwid as a small SUV. In 2018, after a full year of sales, these two are forecast to see sales of 57,500 units combined. The Gol is forecast to account for 12% of VW's Brazilian sales in 2018, with the Kwid providing Renault with about 14% of its volume in the same year. The two models will deliver about 17% of entry-price car sales in 2018, and about 3.3% of total market sales. The Kwid comes to market on Renault's CMF-A platform, specific to this vehicle. The Kwid was launched first in India, and in response to crash test results at the Indian launch, Renault has made the Brazilian version the first high-volume vehicle in Brazil to offer standard side airbags. The Gol's sales have struggled during Brazil's recession, falling from best-selling nameplate in 2014 to sixth position in 2015, although recent changes have improved the vehicle's sales performance in 2016. As a result, the Gol should see a stronger sales performance by the next-generation model.
Additional cars significant in volume terms that are due for launches in Brazil in 2017 are the Fiat Palio, Fiat Grand Siena, VW Voyage, and a Toyota B-segment vehicle expected as hatchback and sedan. Other cars forecast to see updates launched in 2017 include the Honda Accord, Toyota Camry, Hyundai Azera, and Subaru Impreza. These are lower-volume entries and all imported. However, the Fiat Palio, VW Voyage, and Toyota B-segment vehicle are being built in Brazil, while the Fiat Grand Siena is built in Argentina.
The Fiat Palio and Grand Siena are forecast to see sales of nearly 48,500 and 34,300 units, respectively, in Brazil during 2018, growing to 52,500 and 42,700 units, respectively, in 2021. IHS Automotive also expects Fiat Chrysler Automobiles (FCA) to continue production of the current versions alongside the new cars for several months. The vehicles will take an update to the existing Type 199 platform. For Fiat, the Palio is forecast to be the brand's second-best-selling product in 2018, behind the recently introduced A-segment Mobi, despite the somewhat disappointing launch performance of the Mobi. However, the Palio has been losing share in the declining Brazilian market, as buyers have opted to choose brands newer to the market, generally eroding Fiat's share. By 2021, Fiat is forecast to see the Strada as its best-selling product, with the Palio slipping to fourth place. The Palio is forecast to drop from about 24% of Fiat's Brazilian sales in 2016 to 15% in 2021 − still an important product to the brand's regional performance, but less so than in previous years. The Grand Siena sedan is forecast to see improving performances, however, increasing from nearly 9% of Fiat's Brazilian sales in 2016 to more than 12% in 2021.
The VW Voyage, also scheduled to be launched in 2017, moves to VW's MQB A0 platform, replacing the current PQ22 platform sedan, and is part of the Gol family. As the Brazilian market improves, by 2021 the vehicle is forecast to contribute nearly 42,000 units to VW's sales in the country. While the Voyage is forecast to start out strong, by the beginning of the next decade, other products in VW's range are expected to outperform it. In the recent past, the Voyage sedan has struggled as consumers have increasingly turned to entries from Hyundai, Toyota, and Nissan. In 2016, we forecast the Voyage will account for about 11% of VW's Brazilian sales. In 2021, this share is forecast at 13%, although lower than a peak of 18% in 2018. For Toyota, the Corolla will remain its highest-volume Brazilian entry, but the new B-segment sedan and hatchback are forecast to account for 40% of Toyota's sales in the country, compared with about 18% in 2018.
While Brazil is not taking to SUVs as quickly as many other global markets, the body type is forecast to grow from nearly 15% of Brazil's light-vehicle sales in 2016 to more than 20% in 2021. Entries in the mid-price range are forecast to grow from about 228,000 units to 438,000 units in those years. In 2017, the SUVs launched in this price range are forecast to include the Honda WR-V and the Hyundai Creta, while a B-segment SUV from Jeep has been pushed back to 2018, according to IHS Automotive research. In 2018, the Honda and the Hyundai are forecast to see sales of about 45,000 units. The Honda WR-V is expected to be priced, within Honda's line-up, between the Fit and the HR-V. While Honda has seen success in Brazil by positioning itself at the upper end of the mainstream price scale, an earlier rugged looking Fit Twist was not particularly successful. The WR-V will take a separate look from the Fit, though it shares platform. Hyundai's upcoming Creta SUV is expected to be on the same platform as the successful HB20, although it may end up cannibalising some the HB20X's sales (a version of the HB20 with an off-road appearance, similar to the Fit Twist).
Other mid-priced SUV updates expected in 2017 include the Honda CR-V, Volkswagen Tiguan XL, Toyota C-HR, and Chery Tiggo5. Of those, the Honda CR-V is forecast to see the highest sales over the next several years, at less than 5,000 units per annum. The Tiggo5 will be produced in Brazil, but IHS Automotive expects Chery to have some difficulty in the segment as the brand is not yet as strong as Honda, Jeep, Ford, and Renault.
Premium segments
Premium SUVs due for introduction on the Brazilian market in 2017 include the Audi Q2 and Q5, Mercedes-Benz GLC Coupe, Land Rover Discovery, Tesla Model X, Alfa Romeo Stelvio, Maserati Levanti, Land Rover Range Rover, and Volvo XC60. These vehicles will not contribute significant volume in the near term − all seven combined are forecast to see sales of about 4,300 units in 2018. Overall, IHS Automotive forecasts premium SUV sales in Brazil will grow from about 24,000 units in 2016 to about 38,000 units in 2021. While still representing only 1.6% of the market, there is growth opportunity for these vehicles.
Premium cars forecast to launch in Brazil in 2017 include the Audi A5 (sedan, sportback and cabrio), Alfa Romeo Giulia, Porsche Panamera, BMW 5-Series, and Mercedes-Benz E-Class. These introductions will represent an even smaller portion of the market than the premium SUVs, with total sales of this group in 2018 forecast at about 1,500 units. Premium cars in Brazil are forecast to see overall sales approaching 25,000 units in 2018, growing to nearly 34,000 units in 2021, or about 1.4% of the market.
Outlook and implications
While the Brazilian market has struggled greatly over the past few years, IHS Automotive forecasts a return to slow growth in 2018. By 2021, the market is forecast to see sales reach 2.37 million units − not near the peak of 2012, but much higher than the 1.88 million units forecast for 2018. Among the most significant launches due in 2017, from a volume perspective, are the Fiat Palio and Grand Siena, Volkswagen Gol and Voyage, Honda WR-V, and Renault Kwid.
IHS Automotive forecasts that the Brazilian market will continue to adopt the SUV body style more slowly than mature markets such as the United States and Europe. This will be true even though the number of SUVs planned for launch in Brazil in 2017 is nearly the same as the number of cars. However, Brazil remains largely a car market, in part as a result of the vehicles that have been offered on the market to date. With the higher volume of new cars being introduced in 2017, SUVs are forecast to see sales of about 312,000 units in 2018, compared with car sales of 1.22 million units.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.