The Brazilian auto industry has a long history in the country. The first automakers arrived in the country in the 20th century. Before that, the first motorized vehicle arrived in Brazil in 1891 in the port of Santos (SP). The Peugeot Type 3 model was the first car to move on the roads of Brazil. It was imported by the Brazilian inventor of the airplane, Santos Dumont. Later, another model arrived in São Paulo brought by the family of the founder of the São Paulo Military Police, Tobias de Aguiar. However, the first car was licensed in the country in 1903. Plate number 1 belonged to Count Francisco Matarazzo.

The history of the Brazilian automotive industry reveals a lot about the country’s technological, economic, and social evolution.

First cars in Brazil

In the first decades of the 20th century, São Paulo received the factories of Ford and General Motors, both based in the capital of São Paulo. The first to arrive was Ford. It established itself in the country in 1919, when it began assembling its Model T. In 1925, General Motors made its entrance into the Brazilian automotive industry. During this decade, the first paved highway was constructed between Rio de Janeiro and Petrópolis. Between 1920 and 1939, the number of cars increased from 5,000 to 43,000 in São Paulo.

The Automotive Revolution of the 1950s

At the end of the 1940s, Brazil maintained an aging fleet of American and European cars and trucks from the 1930s. However, from 1941 until the end of World War II in 1945, the number of auto parts factories increased in the country, reaching 50. This scenario gave origin to a series of suppliers that would later come to supply the local manufacture of automobiles in the growing Brazilian automotive industry.

However, until the middle of the 20th century, it had only one automotive assembly plant. As a result, there was no total local production of vehicles. This began to change under President Getúlio Vargas. Two crucial initiatives were the opening of  The Brazilian national steel company, Companhia Siderúrgica Nacional (CSN), and its national motors factory, Fábrica Nacional de Motores (FNM). Both of these entities were located in the state of Rio de Janeiro.

From 1947 to 1952, the Brazilian government took action intending to restrict imports of motor vehicles and auto parts. As a result, it invested more in the Brazilian automotive industry than importing oil or wheat. Even so, given the exchange rate favorable, the Europeans occupied a significant share of the market in Brazil. If previously the streets were filled with American cars, in the 1950s, British automobiles were commonly seen on Brazilian roads.

In the government of Juscelino Kubitschek, in 1956, the Executive Group of the Brazilian Automotive industry was created (GEIA) by decree nº 39.412. The organization was put under the command of Admiral Lúcio Meira to make national car production initiatives a reality. At the time, the Brazilian fleet had 800,000 vehicles, and cars and trucks had a huge demand. As a result, Brazil established ambitious nationalization goals for the industry.

Manufacturing was one of the policy pillars of the Kubitschek government. The promise of 50 years of progress in five had industry and transport as two support pillars. The focus was to leverage domestic industry, creating an industrial park of factories, a network of auto parts suppliers, and peripheral infrastructure services.

Thus, the first 100% Brazilian-made national car appeared in 1956. It was made by a company called Romi, which manufactured lathes and agricultural equipment. The Romi Isetta had an engine that was similar to that of a motorcycle, small wheels, and two doors. The National Motor Factory and Vemag launched nationally produced cars the same year. However, these were licensed copies of European and North American models.

With the 1953 ban on importing fully manufactured autos, Volkswagen, Mercedes-Benz, and Willys-Overland established factories in Brazil. In addition, the GEIA showed that, by 1960, 90% of the trucks and utility vehicles sold in Brazil should have domestic components. These goals have been met and exceeded, thus strengthening the Brazilian automotive industry.

Eventually, the dominant manufacturers began to produce modern vehicles that were more compatible with the demands of the Brazilian driver. As a result, the industry started to coalesce in São Bernardo do Campo, São Caetano, and Santo Andre ́, also known as the ABC region of São Paulo. In the 1970s, new assemblers emerged in the Brazilian automotive industry, establishing themselves in other areas of the country, emphasizing Fiat Automóveis SA in Minas Gerais, Agrale in Rio Grande do Sul and Volvo in Parana ́.

The Brazilian automotive industry today

In the 1990s, vehicle imports rose again when the Brazilian automotive market opened. Currently, Brazil has 20 companies that compete domestically. The Brazilian automotive industry comprises 65 factories in 11 states, with an installed capacity of 4.5 million vehicles annually. In addition, the country currently has approximately 5,500 dealerships. Brazil exports about 22% of its automobile production, and the industry employs approximately 126 thousand workers.

After a period of recession, the recovery of the Brazilian economy should signal the automotive sector’s return to a path of growth. The industry closed 2018 with a growth rate of 16%, and in 2019 the industry’s expansion exceeded 12%.

Overcoming a recession is not easy for any sector of an economy, including the automotive industry. However, some experts believe that the Brazilian automotive industry has a promising future even though they may think that the government must improve incentives to the sector. One of these initiatives is “Rota 2030,” a government program defining vehicle production rules in Brazil for the next 15 years.

Divided into three periods of five years each, the program predicts how much manufacturers will need to invest in research and development in Brazil. The goal is that, by 2022-23, companies will use 1.22% of their invoicing for R&D activities. In return, they can deduct from 10.2% to 12% of the amount invested in income tax.

Rota 2030 will also require greater energy efficiency, and vehicle safety, in addition to stimulating the creation of future solutions for mobility, autonomous vehicles, and professional training.

The Brazilian automotive industry will remain very important to the nation’s economy. It is one of the country’s largest manufacturing sectors and is crucial in generating employment and promoting technological development. Today, Brazil is also one of the world’s largest producers of automobiles, and many of the major global automakers have production facilities in the country. Among the vehicle models manufactured in Brazil today are the Fiat Pulse, Jeep Compass, Peugeot 2008, Volkswagen Gol, Honda HR-V, Chevrolet Tracker, Land Rover Discovery, Mitsubishi Outlander, Hyundai HB20, and others.

 

Argentina is a very heterogeneous country in terms of geography, climate, and soil type. It is also very diverse in terms of production. Industries in Argentina are extensive and cover activities of all kinds. Some productive activities include food (agricultural, fishing, dairy, wine, and food processing), forestry, mineral origin (mining, steel, refineries, oil, and gas), and electronics, among many others. This post will discuss the leading industries in Argentina, what they consist of, and in which areas they are developed.

Argentine national industry

Argentina’s national industry is essential for the growth of the country and is one of the most important in South America. It is characterized by the transformation of raw materials into finished products for direct consumption or intermediate products to be later applied in other industries. This is due to the wealth of natural resources that is characteristic of Argentina, which allows the extraction of a great diversity of raw materials.

In a word, the distinctive feature of Argentine industry is the value chain that characterizes it. Different actors are involved in production to obtain final products.

Principal industries in Argentina

Automotive Industry

Argentina’s automobile industry is an important sector of the country’s economy. The industry began in the early 20th century and is one of the largest in Latin America. The leading manufacturers in Argentina include General Motors, Ford, Volkswagen, Renault, Toyota, and Fiat, among others.

The Argentine automotive industry produces a wide range of vehicles, including cars, trucks, buses, and motorcycles. The industry has benefited from significant government support, including tax incentives and subsidies for both manufacturers and consumers. In addition to producing vehicles for the domestic market, the Argentine automobile industry also exports to other countries in the region and beyond.

Food industry

The food industry is one of the primary industries in Argentina, if not the most important. The food industry is what distinguishes the country for its quality and innovation. It covers the following industrial sectors: agriculture, livestock, fishing, food, and beverages.

In the agricultural industrial sector, cereals, oilseeds, fruits, and vegetable production stands out. In addition to this, Argentina produces sugar, grains, and tobacco crops. Livestock farming focuses mainly on beef, although lamb and pork are also produced, while the fishing industry is highly developed thanks to Argentina’s long Atlantic Ocean coastline.

Pharmaceutical industry

The pharmaceutical industry is also one of the most critical industries in Argentina. Almost 70% of the industry is domestic. More than half of the drugs for internal use by the country’s citizens are produced by Argentine companies. Although Argentina receives imports of medicines that are not manufactured locally, the sector also exports. Significant investments have been and are being made in the pharmaceutical industry for biotechnological and bioengineering development.

Oil and mineral industry

The oil industry is one of the leading industries in Argentina. This is due to the large amount of oil and mineral reserves that the Argentine soil possesses for the production of fuel and natural gas.

This sector requires significant economic investments for its development and safe exploitation. It also requires specialized labor and large-scale, heavy machinery.

Main industrial areas of Argentina

The main industrial areas of Argentina are located throughout the country. To a large extent, it depends on the sector and the activity carried out in the region. The prominent locations of industries in Argentina are considered below:

Cuyo Industries

The Cuyo region is made up of the provinces of San Luis, San Juan, and Mendoza.

There, viniculture for wine production is dominant. The wines produced in the Cuyo region are internationally renowned and are intended for both domestic and foreign consumption. The wine industry is principally concentrated in the provinces of San Juan and Mendoza.

The region is also known for its fruit and vegetable agroindustry and processed food products.

Patagonian Industries

Argentine Patagonia is made up of the provinces of Tierra del Fuego, Santa Cruz, Chubut, Neuquén, and Río Negro.

As for the food industry, this region produces the so-called “fine fruits,” or forest fruits, and cattle and sheep farming. The province of Río Negro is the leading producer of pears and apples in the country. Part of the production is intended for the preparation of food and beverages, as well as for export.

Most of the oil industry is found in this region, especially in the province of Neuquén. Tierra del Fuego is home to a large part of the country’s industrial electronics factories and the fishing industry, thus positioning Ushuaia and Río Grande among Argentina’s most important industrial cities.

Industries of the Northeast or Mesopotamia

The provinces that make up the Argentine Northeast are Misiones, Corrientes, and the north of Entre Ríos.

The region’s food industry is dedicated to the production of rice, tobacco, sugar cane, cassava, and citrus. In addition, cotton for use in the country’s textile industry is produced in this region.

Northwest Industries in Argentina

The Argentine Northwest, which is the NOA by its Spanish acronym, includes the provinces of Tucumán, Salta, Santiago del Estero, Catamarca, Jujuy, and La Rioja.

Agroindustry is also developed in this region. The Northwest harvests sugar cane, tobacco, vegetables, fruits, and spice crops. In addition, the province of Salta is home to part of the country’s petrochemical industry, with its oil and lithium distilleries.

Industries of the Pampas Zone

The Pampas region covers the provinces of Córdoba, La Pampa, Buenos Aires, Santa Fe, and part of Entre Ríos.

This area is part of the sectors that develop agroindustry and livestock. It is where oilseeds, cereals, and grains are produced and where manufacturers of vegetable and animal products are produced. The meat processing, dairy, and fishing industries are also present in the region. Córdoba and Buenos Aires provinces also have a large concentration of the clothing and textile industry. The forest industry and paper production are also carried out in Santa Fe and Buenos Aires. Factories in Buenos Aires concentrate a large part of the industries in Argentina.

Contact LATAM FDI for more foreign direct investment investment information.

Latin America registered its best Economic Climate Index (ECI) level in the first quarter of 2023.

In the first quarter of 2023, the business climate in Peru ranks fourth among its Latin American neighbors. This is according to a study recently released by Brazil’s Getúlio Vargas Foundation (FGV).

The Economic Climate Index (ECI) of the region, which was prepared with the input of 143 specialists from 15 countries, gives the business climate in Peru 89.6 points.

The FGV report specifies that Paraguay remains the leader in the list of Latin American countries with the most significant improvement. Its Economic Climate Index score jumped from 114.7 to 162.3 points. This is partly thanks to the fact that the country began to recover from a significant drought that resulted in a loss of exports to Russia.

In second place was Uruguay, with 99.3 points, followed by Mexico (89.8 points), Peru (89.6 points), Ecuador (79.1 points), and Brazil (73.5 points).

Business Climate Performance

Colombia’s indicator fell from 137.6 points in the last quarter of 2021, when the progressive Gustavo Petro was elected president.  Colombia’s ICE registered 53.5 points in the first quarter of 2023.

Chile (35.7 points), Argentina (35.3), and Bolivia (32.1) complete the list, with very low indicators.

He specified that the indicator for Venezuela stopped being measured several months ago due to the exceptional situation in the country.

The FGV revealed that the business climate in Latin America registered its best level in the first quarter of this year since the last quarter of 2021. Overall, the region’s ICE rose 6.9 units in the last quarter, reaching 73.4 points. Despite this fact, the ICE is 3.5 points below its average for the previous ten years (76.9), but the first quarter of 2023 represents its best score since the end of 2021 (80.6).

According to the Getúlio Vargas Foundation, the largest private university for economic studies in Brazil, the rise in the ICE indicator was due to both the improvement in the perception of the current economic situation and the projection in the outlook for the next six months.

GDP projections

The FGV’s study considers the forecasts of the gross domestic product (GDP) of the countries in the region for 2023, which are mostly below 3%. According to the Getúlio Vargas Foundation, “this is worrying for a developing region that has limitations in physical infrastructure and indicators of social development.”

In the last quarter, only the GDP growth prospects of Paraguay (4.6%), Mexico (1.7%), and Argentina (1.2%) improved, while they worsened in Chile (-1.8%), Colombia (1.1%), Brazil (1.1%), Bolivia (3.4%), Peru (2.5%), Uruguay (2.4%) and Ecuador (2.4%).

The economic survey of Latin America allows the monitoring and prediction of economic trends based on quarterly information provided by experts in the economies of each country examined.

The same methodology is applied simultaneously to all the countries of the region. Conducting the study in this manner allows the construction of an agile and broad panorama of the economic situation of the countries and economic bloc under consideration.

Peru grew in the last quarter of 2022

In the fourth quarter of 2022, Peru’s GDP grew by 1.7%. This gain in Gross Domestic Products is a result that is mainly explained by the performance of domestic demand at 2.1%, driven by family consumption (2.3%), as well as by the increase in investment gross fixed capital (2.6%), especially public investment (23.4%), reported the National Institute of Statistics and Informatics (INEI).

It specifies that the evolution of economic activity occurred, and the business climate in Peru took place in a context of slower growth in the world economy and that of Peru’s main trading partners.

During 2022, Peru’s GDP grew by 2.7%. This was driven by domestic demand. This sector of the economy presented a gain of 2.3%. This result was mainly due to the contribution of household consumption (3.6%) and gross fixed capital formation (0.8%). Exports (5.9%) and imports of goods and services (4.2%) also showed positive results.

The business climate in Peru has benefitted from macroeconomic stability. The country has maintained a stable macroeconomic environment for many years. This has resulted in low inflation, low debt, and a stable currency. These factors make Peru an attractive destination for foreign investors.

In addition to stability, the business climate in Peru benefits from the country’s diversified economy. In addition to a strong mining sector, the country has a growing manufacturing and service sector. This growth is attributable to the investment-friendly policies that the Peruvian government has put into place. These policies include tax incentives for investors and streamlined procedures for setting up a business.

Bolivian exports of the country’s traditional and non-traditional sectors reached a value of USD 6.9 billion, with a participation of 51% in the total value of shipped products in 2022. This is according to data provided by the Bolivian Ministry of Foreign Affairs.

The Foreign Ministry pointed out in its Foreign Trade of Bolivia 2022 report that “the generation of added value and diversification of  Bolivian exports are fundamental components of this new cycle.”

As of December 2022, Bolivia’s sales to the world reached the highest level in the country’s history of foreign trade, with a value of USD 13.6 billion.

All sectors of Bolivian exports registered growth in 2022

According to economic activity registered between January and December 2022, Bolivian exports achieved dynamic growth in all economic sectors (agriculture 75%, hydrocarbons 31%, minerals 11%, and manufacturing 23%), with a variation of 24% on average, compared to 2021.

Another way to analyze the composition of Bolivian exports to the global market is through the classification of goods into those traditional and non-traditional. In the case of the latter class of goods, they are characterized by the generation of added value in the Bolivian manufacturing sector.

In 12 months of 2022, in terms of value, traditional exports reached USD 9.7 billion with a positive variation of 17% compared to 2021, and non-traditional exports totaled a value of USD 3.8 billion with a positive variation of 43%.

In terms of volume, traditional exports presented a negative variation of 11%, and non-traditional exports had a positive variation of 31% compared to 2021.

Based on the provisions of the Foreign Ministry report, traditional Bolivian exports continue to take advantage of the international situation of high prices for the primary raw materials (gas and minerals). This is mainly due to the war between Ukraine and Russia and the sanctions imposed by the United States and the European Union on the Russian economy.

Non-traditional exports also benefitted from high international prices. However, unlike traditional exports, they have a high volume and value-added component.

Generally, the growth of exports (traditional and non-traditional) constituted a significant source of foreign exchange and income collection for the Bolivian economy. The non-traditional export sector generated jobs, added value to production, and had a multiplier effect for other sectors of the Bolivian economy.

Traditional Bolivian products

Within the main products exported in this category, metallic gold exports reached a value of USD 3 billion, with a growth of 18% in value and 35% in volume; the sale of natural gas reached a value of USD 2.9 billion, reporting a 32% increase in value and a 15% decrease in volume; and shipments of zinc ores and their concentrates reached a value of USD 1.8 billion with an increase of 32% in value and 10% in volume.

Sales of metallic gold reached an export volume of 64 tons, 17 tons higher than in 2021. The main destination markets were India (75%) and the United Arab Emirates (17%), and the central exporting regions were La Paz (75%), Beni (15%), and Santa Cruz (7%).

The sale of zinc ores and concentrates registered an export volume of 772 thousand tons, 73 thousand tons higher than in 2021. The main destination markets were Japan (45%), South Korea (12%), Belgium (12%), China ( 12%), and Belgium (11%). The leading regional exporters were Potosí (87%), Oruro (6%), and La Paz (4%)

Non-traditional products

Between January and December 2022, non-traditional Bolivian exports reported a positive variation of 43% in value and 31% in volume compared to 2021. This was driven by the growth in value and volume of exports from the agri-food sector: oilseed complex (soybeans and derivatives, sunflower, and derivatives), foodstuffs, chestnuts, beef, sugar, and bananas.

Industrial products also have a contribution, among which granulated urea, chemical products (basically lithium carbonate and potassium chloride), and ethyl alcohol stand out.

Bolivian exports of soybeans and derivatives (grain, crude and refined oils, soybean meal, and cake) constituted an important source of foreign exchange generation for the country. Sales of soybeans and derivatives recorded a value of USD 2,2 billion and a volume of 3.54 million tons.

The main destination markets for these products were Colombia (42%), Peru (26%), Ecuador (13%), and Argentina (11%). The leading exporter was Santa Cruz (98%).

Shipments of Brazil nuts (with and without shells) registered a value of USD 198 million and a volume of 26,435 tons. The main destination markets were the Netherlands (34%), Peru (26%), the United States (22%), the United Kingdom (12%), and Germany (11%). Beni (80%) and Pando (18%) were the main exporters.

The mobilization of sunflower derivative products (oils and cakes) registered a value of USD 157 million and a volume of 159 thousand tons. The main destination markets were Ecuador (64%), Colombia (12%), and Peru (10%). The leading exporters were Santa Cruz (95%) and Cochabamba (5%).

Exports of beef, edible offal, and preparations registered a value of USD 128 million and a volume of 20,373 tons. The main destination markets were China (81%), Hong Kong (9%), Ecuador (4%), Peru (4%), and Russia (2%). The leading exporter was Santa Cruz (100%).

The placement of Bolivian exports of fresh bananas in foreign markets registered a value of USD 47 million and a volume of 127,457 tons. The main destination markets were Argentina (98%), Uruguay (1%), and Chile (1%). The main exporter was Cochabamba (99%).

Finally, the same was done with granulated urea, which totaled a value of USD 193 million. The volume exported reached 383 thousand tons. The main destination markets were Argentina (45%), Brazil (42%), and Peru (8%). The leading exporters were Cochabamba (98%) and La Paz (2%)

For information related to opportunities for foreign direct investment in Bolivia, contact LATAM FDI.