Research and Markets: South America Automotive Review Forecasts to 2014 - Combined Light Vehicle Sales in the Five Countries Surveyed Are Forecast to Grow by a Modest 1% in 2010

Research and Markets( http://www.researchandmarkets.com/research/b31bf5/south_america_auto) has announced the addition of the " South America Automotive Review Forecasts to 2014" report to their offering.

Light vehicle sales in South America's five largest markets, including Brazil, Argentina, Venezuela, Colombia and Chile, are estimated to decline by 6.2% to 3,720,910 units in 2009, from 3,968,430 in 2008, as the global financial crisis impacted the main economies in the region.

Combined light vehicle sales in the five countries surveyed in this report are forecast to grow by a modest 1% in 2010, with a decline in the Brazilian market offsetting moderate growth in other markets. Provided the global economy continues to recover, combined sales are forecast to grow by 6% in 2010.

These are the headline statistics from just-auto's brand new review of South America's automotive markets. At over 140 pages and containing 70 data tables, the report provides an excellent value-for-money package of analysis and data presenting the past and future market trends in Argentina, Brazil, Chile, Colombia and Venezuela.

If you need to know the state of the industry in this region and how it's likely to develop out to 2014, the concise research in this report is the ideal point of reference to work from.

Each chapter reviews one of the main markets and covers:

Economic overview
A review of the light vehicle market
Light vehicle sales data and analysis
Light vehicle production data and analysis
Trade agreement information
A review of manufacturers' activities

Our data trends from 2006 to 2014 for each market and includes:

Passenger car sales volumes by vehicle type; brand; segment; manufacturer; manufacturer and model. Plus, (where available) truck sales by model.

Executive Summary:

FEATURE: South America's auto industry rides recession

South America's auto industry is faring relatively well in the global recession. While it has been impacted by lower global demand, local markets have been supported by government stimulus packages - especially in the biggest market, Brazil. This overview of major developments in the region's auto industry is extracted from just-auto's latest research.

Regional light vehicle sales down but not out Our research shows that the light vehicle sales in South America's five largest markets, including Brazil, Argentina, Venezuela, Colombia and Chile, are estimated to have declined by around 3% to 3.7m units in 2009.

The regional decline would have been much sharper had Brazil - the region's largest market by far - not reduced vehicle taxes in December 2008 as a means of stimulating domestic demand and thus averting mass lay-offs in the automotive industry.

Light vehicle sales in Brazil in 2009 were just over 3m units - some 12.6% ahead of 2008. The Brazilian market was lifted by tax cuts, but some demand weakness is expected in 2010 as the stimulus was withdrawn gradually during the fourth quarter of 2009.

With economic growth in Brazil forecast to gather pace in 2011, light vehicle sales are expected to strengthen significantly during the forecast period to reach new record levels from 2011.

Argentina's stimulus measures have been less effective and its light vehicle market declined by around 10% in 2009. Nevertheless, the decline could be much worse had the stimulus not been introduced and a slow recovery is expected to take place from 2010.

Slow recovery in 2010 Combined light vehicle sales in the five countries surveyed are forecast to grow by a modest 1% in 2010, with a decline in the Brazilian market offsetting moderate growth in other markets. Provided the global economy continues to recover, combined sales are forecast to grow by 6% in 2010. By 2014, combined volumes are forecast to reach 4.5m units, with Brazil accounting for 60% of the total.

Brazil's automotive industry in good shape Brazil is South America's largest economy, with a population of close to 200m and a GDP per capita of US$10,300 on a purchasing power parity basis. Industry and mining represent roughly 28% of GDP and consist mainly of textiles, footwear, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and machinery.

The rapid growth of China's economy has dramatically increased export demand for Brazil's raw materials. Between 2005 and 2008, the country's economy expanded by an annual average of just under 5%, and by 5.1% in 2008, to approach US$1.6tn.

Brazil's light vehicle market has survived the global financial crisis in good shape, with consumers responding strongly to tax cuts on small cars and light commercial vehicles and to low interest rates.

Light vehicle production increased to 2.9m units in 2009 as the buoyant domestic market more than compensated for lower exports.

The country is attracting significant new investment both from vehicle manufacturers already present in the country and from new entrants, as they vie to increase their exposure to a substantial and growing automotive market. Further opportunities seen in regional market and industry integration, which Brazil leads through its membership of the Mercosur trade block. Automotive trade between South American countries has increased significantly, mainly through product complementation strategies.

Argentina in long-term recovery mode The Argentine light vehicle sector has recovered strongly from the 2001-2002 crisis and significant progress is being made under the Mercosur free trade agreement. Significant trade has been developed with Brazil through product complementation, and trade with Uruguay and Paraguay has also increased. Fiat restarted operations in 2008 and Honda is expected to launch production in mid-2010. The global economic crisis is seen as a temporary setback, with sales forecast to recover from 2010 after dropping by 10% in 2009.

The economy has rebounded strongly from the 2001-2002 financial crisis, the deepest in the country's history, which saw GDP shrinking by 11% (2002), the Government defaulting on sovereign debt, a run on the banks, a sharp devaluation of the peso and violent protests.

Although Argentina's economy and vehicle market is recovering from the severe crisis that hit at the beginning of the last decade, it has still experienced some adverse impact from the global economic crisis of the last 18 months. Argentina's light vehicle market declined by 19% to 470,000 units in 2009.

As global economic growth picks up from 2010 the vehicle market is expected to recover moderately from what we expect will be a cyclical low in 2009 and will reach new peaks in 2013 and 2014. A slower global growth scenario would delay this recovery. With an estimated 8.3m light vehicles in use, ownership levels are just under 200 vehicles per 1,000 inhabitants.

In 2004, Mercosur signed a broad cooperation agreement with the Community of Andean Nations and published a joint letter of intention for future negotiations towards the integration of all of South America under a common market framework.

Mercosur (Mercosul in Portuguese) Argentina, Brazil, Paraguay and Uruguay originally signed an agreement in 1991 committing them to the development of a common market, called Mercado Comn del Sur, or Mercosur. The agreement currently sets a common import duty rate of 35% on light vehicles originating from outside the trade block.

Separate bilateral agreements exist with associated member states, including Bolivia, Chile, Colombia, Ecuador and Peru, which enjoy preferential tariff rates. Venezuela's application to join as an associate member was still pending in November 2009.

Mercosur founding members signed the 35th Additional Protocol agreement in July 2008, which expires in June 2014. As well as setting the above-mentioned common external import duties, the agreement makes provision for duty-free trade of automotive products provided they meet conditions of origin. It also lays down rules on managed bilateral trade, including quantitative restrictions, in order to prevent significant trade imbalances between member states.

The current agreement aims to achieve effective integration and consolidation of Mercosur's automotive industry, allowing manufacturers to achieve global levels of competitiveness and scale through production specialisation and product complementation.

Mercosur's Automotive Committee will begin to evaluate the effects of the latest agreement from July 2013. It will pay close attention to trends in investment, production and trade between member states, with a view to eliminating all non-tariff and quantitative restrictions.

Andean Automotive Agreement Andean Automotive Agreement aims to develop a common automotive market between the Community of Andean Nations (CAN) of Ecuador, Colombia and Venezuela by setting external import duties on light vehicles at 35% and at 15% for medium and heavy commercial vehicles. Tariffs on auto parts lie in the 0-15% range. Duties are not applied to automotive products produced and traded between member states.

The future of this agreement is in the balance after Venezuela announced its withdrawal from CAN and the AAA in protest over free trade agreements negotiated separately by Colombia with the United States. Its withdrawal has been gradual and is scheduled to be completed by 2011.

Bilateral trade agreements Columbia and the US Colombia has eliminated tariffs on imports from the US of large engined four-wheel drive vehicles (over 3000cc). Duties on other motor vehicles will be reduced over a ten-year period. Colombia enjoys duty free access to the US for all auto products.

Mercosur and Mexico signed a bilateral agreement with individual members of the Mercosur trade pact in 2006, allowing managed duty-free trade of vehicles and automotive products provided that the products meet the origin provisions of the agreement. Significant automotive trade takes place between Mexico and Brazil, and Mexico and Argentina.