Market Research Report
Latin America Passenger Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)
|Latin America Passenger Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)|
Published: January 17, 2022
Mordor Intelligence Pvt Ltd
Content info: 60 Pages
Delivery time: 2-3 business days
The Latin America passenger car Market is expected to register a CAGR of 4.38%, during the forecast period, 2020-2025.
The Latin America passenger car market is recovering at a steady pace after most of the countries were strongly affected by currency deviation and economic crisis. The overall passenger car market was boosted by the recovery of the Brazilian market, which accounts for the major market share in terms of exports, production, and sales.
The prime factors driving the growth of the sales and demand for passenger cars were low-interest rates and improving consumer confidence. For instance, the exports and sales of passenger cars in 2018, when compared with the first four months of 2017, witnessed an increase of 50.4% and 9.9%, respectively.
Although the passenger car industry in Latin America is dominated by gasoline, ethanol-driven cars recorded good sales during the last three years.
Brazil is the second-largest producer of ethanol, globally. In Brazil, 42% of the vehicles sold use ethanol, making gasoline an alternative fuel in the country. During 2015-2016, 30.23 billion liters of ethanol was produced. Majority of this production is used for the domestic market, where it is sold as pure ethanol fuel or blended with gasoline.
Owing to the increased fuel prices, taxes, and emission standards, ethanol was introduced as a substitute for fossil fuels. In 2016, a total of 20 Latin American countries agreed to push biofuel production. Furthermore, in March 2018, the Brazilian President signed a decree regulating the National Biofuels Policy, which aids the expansion of ethanol and biodiesel in the country's energy mix.
Currently, there are two commercial ethanol production facilities in Brazil, GranBio group and Raizen, with a combined capacity of 132 million liters.
All these factors are contributing to the growth of ethanol-driven passenger cars in the region over the forecast period.
The Latin American market offers a huge potential for the automotive industry, as present car ownership in the region is low and disposable incomes in the region are growing at a higher rate than in the Asia-Pacific region.
The automotive industry witnessed a healthy growth rate, with total sales accounting to 1.39 million units across the nine largest markets in the region.
The social and political instability in the region has always adversely affected the market.
Several leading automobile manufacturers, such as General Motors, Subaru, Land Rover, etc. have invested in the Latin American market. Additionally, with the implementation of tax cuts on new vehicles, automobile sales are expected to grow significantly.
Some of the major manufacturers in the market include Nissan-Renault, General Motors, Volkswagen AG, FCA Group, Hyundai-Kia, Toyota Motor Corporation, and Ford. During the first half of 2018, Renault-Nissan has captured the highest market share in terms of volume accounting to 18%, followed by General Motors by 15%, and the VW group with 13%.
Renault-Nissan alliance has a strong presence across the markets like Mexico, Colombia, Brazil, and Argentina. Chevrolet is the most popular brand sold under the GM group. The demand for Hyundai-Kia passenger cars has increased significantly over the last two years, especially in Mexico.
During May 2019, FCA group has planned to invest USD 4 billion to retain the lost market share in the Brazilian automotive industry. With this development, the company will introduce new models and increase the production capacities at the two facilities in the region.