Think of CASE—connected, autonomous, shared and electrified—mobility and you might picture a well organised street scene with dedicated lanes for scooters and people calmly using ride-hailing apps to hitch a lift in a silent, electric and maybe even driverless shuttle.
That scene is likely to be set against a backdrop of a major, well-developed city such as San Francisco, London or Berlin. And it’s the scene that major automaker shareholders want their investment to be supporting.
But most of the major automakers are global, and the markets they sell in range from well-developed to under-developed, and everything in between.
Brazil is a market that perfectly exemplifies the automakers’ CASE challenge. Its massive potential for CASE mobility exists for good reason: a very low starting point.
Like most developing markets, Brazil—not alone among the BRICS nations to be struggling to meet earlier next-big-thing predictions—has a new vehicle market that has been on a sales roller coaster in recent years.
Brazil is a market that perfectly exemplifies the automakers’ CASE challenge. Its massive potential for CASE mobility exists for good reason: a very low starting point
According to a new Automotive World report on the prospects for Brazil’s new vehicle market, sales of light vehicles (LV, defined as passenger cars and light commercial vehicles below 3.5t GVW) grew by 7.6% or 189,000 units to almost 2.7 million units, the third year of growth after four years of decline that took sales down by 45% from their 2012 peak of 3.62 million units. That 2012 peak, notes the report, followed nine consecutive years of growth at a CAGR of 12.1%.
Consider, then, the challenge of bringing CASE technology to a market so volatile, and where the average price of a car, at US$22,200 (Statista), is significantly lower than markets such as the USA, at US$36,700 (Kelley Blue Book) and Germany at US$36,400 (Statista).
The connected car market in Brazil, like many developing markets, is still in its earliest days. Market leader General Motors has recently launched two connected car offerings in Brazil—the Chevrolet Cruze and New Onix, the latter being GM’s latest version of the best-selling car in Brazil. Thanks to a partnership with Claro, one of Brazil’s largest telcos, GM will equip vehicles with an embedded system, taking on those players seeking to gain a foothold through plug-in connectivity for brought-in and aftermarket devices.
Consider the challenge of bringing CASE technology to a market so volatile, and where the average price of a car, at US$22,200, is significantly lower than markets such as the USA, at US$36,700 and Germany at US$36,400
Where there may be potential to develop a market for connected cars, the picture looks very different for autonomous cars. Although there is some indication that Brazilian consumers are interested in autonomous drive technology for reasons of road safety improvement, Brazil is poorly prepared for autonomous vehicles (AVs), according to 2019 research by KPMG of 25 countries’ AV preparedness; KPMG ranked Brazil in last place. Very limited AV testing is taking place, primarily at an academic level, but the country lags far behind in most areas of AV development.
It is in the shared mobility aspect of CASE where Brazil is strongest, although mobility as a service (MaaS) in Brazil is predominantly vehicle-based. Where micromobility start-ups come and go, their hopes dashed by the challenges of poor infrastructure and public attitude to ideas such as dockless scooters, for example, Brazil is the second-largest market for Uber after the US—but even the ride-hailing giant has been forced to adapt its business model to the market.
Electrification is a tough sell in a market dominated by flex-fuel vehicles, which can run on either gasoline or ethanol. Brazil, the world’s leader in ethanol production, has a well-developed and well-loved flex-fuel vehicle market, thanks to generous government encouragement, and despite making positive sounds to develop an electric vehicle (EV) market, the country also still rewards automakers who continue ethanol research.
Brazil is only targeting a 30% share for electric vehicles by 2030, the remaining 70% being ethanol-fuelled
2019 saw a rise in the sale of EVs, at almost 11,900 units compared to just under 4,000 a year earlier. A threefold increase is encouraging, of course, but Brazil remains a challenging market for EVs, and the government appears to be doing little to develop the country’s threadbare EV infrastructure, essential for nurturing an EV market—so threadbare, indeed, that Volvo Cars and Audi are just two examples of automakers that have begun separate initiatives to install charge points in order to establish a network upon which to build an EV market.
Ford’s Chief Executive Jim Hackett recently commented that his company could not keep ‘straddling an old world and a new world forever’. “His counterparts at all the so-called legacy automakers will undoubtedly sympathise—maintaining and developing existing technology while simultaneously developing and launching all-new technologies, is a stretch for all the automakers,” notes Jonathan Storey, author of Brazil’s new vehicle market: prospects to 2024 and beyond. “However, it is a challenge which they will continue to face, if not forever then at least over the near- and medium-term. This is particularly so in markets such as Brazil, which is only targeting a 30% share for EVs by 2030, the remaining 70% being ethanol-fuelled.”
While CASE dominates plans and headlines, concludes Storey, “it is still the traditional suck-squeeze-bang-blow engine technology that puts bread on the table, and in developing markets such as Brazil this will continue to be the case for some time.”