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back to index backLATINtalk May,  2005


Brazilian automakers are betting on the growth of the Arab market to leverage car, bus and truck exports

At Full Throttle

Through the streets of Arab cities run an increasingly greater number of vehicles produced in Brazil: automobiles, trucks and buses boasting renowned international names like Volkswagen, General Motors, Mercedes Benz, Fiat and Scania, not to mention Latin American favorites like Marcopolo or Agrale, all of which have important production units installed in the country. The growing presence of Brazilian vehicles reflects the efforts made by auto manufacturers installed in Brazil to reinforce their stake in the Arab market, an essential component of their strategy to raise total export volume from the US$ 5 billion shipped last year to business on the order of US$ 9 billion forecast in less than two years.

Volkswagen Brazil, for example, which exported 162,000 Passat cars in the 1980s for a total US$ 1 billion, is now shipping vehicles to Lebanon, Libya, Syria and Egypt. We are planning business worth at least US$ 30 million with Arab countries,” informs VW 's export manager, Leonard o Soloaga.

Another major auto giant that has returned to the region is General Motors do Brasil. The company, which once exported pick-ups to Arab countries in the 1980s, recently closed a deal to ship 6,000 Corsa and Astra units to Egypt, besides another thousand Corsas to other countries in the Middle East. The contracts we closed last year should total about US$ 10 million,” calculates Luís Lacreta, director of exports for the company. Fiat, for its part, is also strengthening its ties to the Arab world. After exporting 2,500 cars to Middle Eastern and North African countries last year, the company is currently negotiating the sale of 10,000 Palio cars to Libya.

The story is the same in the heavy vehicle segment, which includes buses and trucks. In the case of buses, the success of companies like Marcopolo come readily to mind.

The Brazilian assembler recently closed a contract for 1,500 units with the Tamimi and Sahiti Transport Corporation (Taseco) in Saudi Arabia. The deal is considered one of the largest purchases of bus bodies by a single buyer. Details of the operation show how Brazilian companies are well positioned to meet the demands of the local market. A batch of 95 units of the order was produced with a removable roof to facilitate the transportation of pilgrims to the sacred cities of Mecca and Medina, because according to their religion nothing can come between the heads of the faithful and Allah.

The competitiveness of auto plants installed in Brazil is demonstrated by companies like the Brazilian subsidiary of Scania. One of the biggest manufacturers of heavy vehicles in the world, for the second time the company won an international auction promoted by Dubai Municipality, the state-owned company that takes care of the urban transport in the sheikhdom. That deal involved the sale of 120 buses especially designed to attend to the characteristics of the local market, including seating divisions for men and women and a height meter so that children up to 1.20 m in height do not have to pay.

Finally, in the truck segment, Brazilian companies have also conquered important contracts. Sales to the region for DaimlerChrysler Brazil (owner of Mercedes Benz) jumped from 865 vehicles in 2002 to about 1,300 units sold last year. The export director for DaimlerChrysler Brazil, Pedro Knoepfelmacher, recalls that the company first began making contacts in the Middle East about six years ago.

We started exporting regularly to Egypt (bus chassis) and from there expanded to other markets like Jordan, Saudi Arabia and the United Arab Emirates. In addition, we have been exporting to Morocco for many years and are making incursions into Tunisia,” he says. Knoepfelmacher explains that the Middle East accounts for between 15% and 20% of the company's total exports and that its share of the regional market is around 30%. The prospects for Volkswagen's Brazilian subsidiary – the German giant's only truck and bus plant in the world – are so promising that the company recently decided to open its own office in Dubai to better serve local demand.

We've closed supply contracts with Saudi Arabia and have talks underway in practically every Arab country,” declares Marcos Forgioni, executive manager of foreign sales for the company. For strategic reasons, Forgioni prefers not to reveal the values of the negotiations off course.

Whether it is buses, trucks or passenger cars, the fact is that Brazilian manufacturers are proving that they understand how to operate with state-of-the-art technology, competitive prices, excellent delivery logistics and efficient after-sales services for the Arab market – a differential that has been reinforcing the presence of these companies in the Middle East.

Source: Brazil magazine by Brazil Ministry of External Relations - GAI


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