November 1, 2012 at 1:00 am

GM focuses on growing Brazil market

At GM Brazil’s Cruz Alta proving grounds, engineers have comparable facilities to those at the Milford site. (GM)

Sao Paulo, Brazil — General Motors Co., a strong player in Brazil for 87 years, is stepping up its game with Fiat and Volkswagen, as it fends off newer contenders in this emerging market.

As South America's biggest market and the world's fourth-largest, Brazil is seeing a wave of fresh cars, trucks and manufacturing investment from European and Asian brands, notably Renault, Nissan and Hyundai.

GM is leaning heavily on its extensive research, design and production capabilities in Brazil. It is expanding its product range and spending $450 million to increase output at its plant in neighboring Argentina.

GM ranks third in overall Brazilian sales, close behind Fiat and VW. Each holds about 20 percent of the market, expected to hit 3.8 million units this year. Ford, the other member of the Brazilian Big Four, has about 10 percent.

In South America as a whole, GM has an 18.5 percent share and has led its rivals for 11 years. It outsells other brands in Columbia, Ecuador, Uruguay, Chile and Venezuela with its Chevrolet nameplate.

The total market size approaches 6 million vehicles annually, which is larger than Japan, notes GM South America President Jaime Ardila.

While GM in the future may import Cadillacs to Brazil to cater to a small but growing luxury car market, for now the focus is very much on Chevrolet. "Chevrolet is considered a local brand by many consumers here," says Ardila, whose organization includes 2,000 engineers and designers with global responsibility for compact pickups and several emerging-market cars, including the Cobalt, Spin and Onix.

Brazil focuses heavily on the small-car segment, with vehicles like the Chevrolet Sonic. Chevrolet sells multiple models, all roughly the same size, but in different formats such as sedan, notchback and hatchback. Buyers favor compact pickups, so Chevy sells a car-based entry called the Montana, and the S10, a larger body-on-frame model.

GM Brazil does lack one key player in its lineup: a compact SUV like Ford's very successful Ecosport and the recently introduced Renault Duster. GM plans to plug that gap with the new Mexican-made Chevy Trax.

One oddity of the Brazilian market is the price that wealthy consumers are prepared to pay for imported luxury cars. Various taxes approximately double the cost of such cars from U.S. levels. The Camaro sells for more than $100,000 in Brazil.

Tours of GM Brazil's extensive design, engineering and manufacturing operations underscore the parent company's commitment to the region and its importance to GM's global strategy as one of the automaker's four global engineering centers. At the sprawling Cruz Alta proving ground complex two hours outside Sao Paulo, engineers have comparable facilities to those at GM's proving ground in Milford.

GM's sophisticated design center near Sao Paulo is part of a tightly connected global network. "Our Brazil studio has the responsibility for emerging markets," says Ed Welburn, GM's global design chief.

"These markets are complex with varying needs and cultural differences. An emerging market is no longer a place you can bring in a 15-year-old model from another country."

Carlos Barba, head of design at GM Brazil, points to the Chevy Spin, a compact crossover, as an example of his department's best work. "It's not just a box to move people, it has character and features like a two-tone interior not expected in this segment."

As one of the oldest players in the market, GM has advantages and disadvantages. It is well known, says IHS Latin America industry analyst Guido Vildozo. But it is more conservative than Fiat, which has more autonomy from its parent and reacts faster to market changes.

"This is an inflection point for GM," says Vildozo. "They have to figure out how to get the mix right as they move from old and well-known products to new vehicles. They have to chart the waters carefully, but they should be able to do it."

John McCormick is a columnist for Autos Insider and can be reached at john.mccormick@detnews.com

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