Regulatory change in Brazil boosts exports and production

Attempts to simplify and reduce the bureaucracy that has been hampering Brazil’s ability to trade with other countries in South America seem to be working, with export demand helping to drive up production in the country, along with stronger domestic sales.

According to the Ministry of Industry, Overseas Trade and Services, in August 2017, vehicles worth a combined $641.6m were exported from the country, an export record for the month.

Figures from the National Association of Motor Vehicle Manufacturers (Anfavea) show that in August, passenger car exports hit 66,600 units – up 61.7% over August 2016’s figure of 41,200.

Exports of cars, light commercial vehicles, truck and bus chassis in the first three quarters of this year came to an all-time high of 566,300 units. This was 55.7% up on same period in 2016. Full-year 2016 exports came to 520,100 units, meanwhile.

September also saw exports rise by 52% compared to the same month last year, with slightly more than 60,000 units shipped, although this year's total for September was down 10% month-on-month.

Single gatewayThese growing exports are based on better communication between carmakers producing in Brazil and customers abroad, not least the signing of several international trade agreements, one of which relates to a new import process based around the Single Import Declaration, which replaces the current Import Declaration and Simplified Import Declaration.

The Single Import Declaration means a car can be registered in a country to which Brazil is exporting before its arrival there and, as a rule, in parallel to obtaining the import licences. As information is provided in advance, procedures such as risk management can be advanced, ensuring faster flow of cargo.

Thanks to this simpler set-up, the cost of issuing certificates of origin for automotive movements between Brazil and Argentina, for example, has fallen 30%. Paperwork can now be issued in 30 minutes as opposed to 24 hours.

In 2018, another agreement will come into force – the Rota 2030 automotive trade agreement, replacing the previous Inova-Auto initiative.

“Part of the cornerstone of Rota 2030 is technological development, vehicle safety, energy efficiency, competitiveness and increased production,” said Igor Calvet, secretary of state for development and industrial competitiveness in Brazil’s Ministry of Industry, Overseas Trade and Services.

Fresh forecastsThe recent uptick in exports has prompted Anfavea to revise foreign and domestic sales projections for 2017 from 2.13m units to 2.2m units – an increase of 7.3% over 2016.

Overall production of finished vehicles in Brazil this year, meanwhile, is now expected to reach 2.7m, up 25%.

Exports certainly drove an increase in vehicle production in Brazil in September. During that month, total production amounted to 236,900 units, up 39% over September 2016 but down 9.2% on August 2017. In the first three quarters of this year, total production rose 27% to 1.9m units.

The domestic market is also showing signs of recovery, with sales in September reaching 199,200 vehicles – up 24.5% on September 2016. In the first three quarters of this year, domestic sales amounted to 1.62m cars, light commercial vehicles, bus and truck chassis ­– up 7.4% over the same period last year.