Auto Makers: Forget About Europe, Turn to Sexy Brazil
The Sao Paulo motor show is under way, pulling attention away from the struggling European market and into to the burgeoning Brazilian auto market. The country has joined India in attracting more interest from auto manufacturers looking to find growth outside of Europe, the U.S., and China. Brazil is the fourth-largest auto market by sales.
General Motors (NYSE:GM) is releasing seven models into the country as part of an effort to solidify South American operations. Brazil accounted for 58 percent of GM’s South American sales last year, but operations in the region lost $122 million. The loss comes after substantial South American profits of $818 million in 2010, a figure GM hopes its new line up will help reclaim. GM’s Onix may be a market favorite.
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Volkswagen has a long history in Brazil, and will be investing $4.4 billion in the region in order to upgrade its line up — perhaps to compete with those seven GM models — and update its manufacturing facilities. VW is releasing a two-door version of the Gol hatchback into the market.
Honda (NYSE:HMC) is rumored to be releasing the Fit Twist for sale exclusively in Brazil. The car is designed to capitalize on the popularity of the subcompact crossover segment. The new model comes with a $50 million investment from Honda over the next two years to add R&D employees in the country.
Not to be left out, Toyota (NYSE:TM) has just begun production of the Etios at its new plant in Sao Paulo.
Meanwhile, shares of Harley Davidson (NYSE:HOG) are up as much as 8.1 percent in afternoon trading, despite earnings that were lower in the quarter than last year. However, the reported earnings per share of $0.59 were in line with expectations because of a decline in shipments expected while the company launched an ERP production system at its largest plant. Harley Davidson is still projecting a 5 to 7 percent increase in shipments for 2012 compared to 2011.
“From our market leadership in the U.S. outreach segments to our global expansion to the effective launch of ERP at York, we continued to see the evidence of the successful execution of our strategic plan,” said CEO, president, and chairman Keith Wandell in the release.
The company developed a dealership network in Brazil in the last quarter as part of a push to appoint as many as 150 dealers worldwide. Harley Davidson sales were up 58 percent in the first half of 2012 in Latin America.