Brazil’s Auto Parts Sector Expecting to Export US$ 6.7 Billion, an 11% Growth

Exports of Brazilian auto parts to the Arab countries totalled US$ 23.4 million between January and May this year, against US$ 14.4 million in the same period in 2004, a growth of 62%.

The figures were supplied by the Brazilian Association of Auto Parts Manufacturers (Sindipeças). Although participation in the Arab market in total shipping is still small, those operating in the sector see a great potential for growth.


“The potential of the Arab market is high,” stated Carlos Alberto da Costa e Silva, the export manager of OEM, a trading company that operates exclusively in the auto parts sector.


“It is today a destination in which there is great investment, as the potential for growth is great. Other destinations have already reached their limit,” he added.


In his evaluation, the countries in the region are appropriate as Brazilian carmakers sell there, creating a demand for replacement parts. Apart from that, according to him, even the vehicles that are not imported from Brazil are, in the least, “similar” to those used here and may use the same components.


The Brazilian industry also produces parts compatible with various imported vehicles, like BMW, Mercedes-Benz and Volvo vehicles.


The auto parts sector was identified, in studies by the Arab Brazilian Chamber of Commerce (CCAB), as one with great export potential to the region.


“This was made very clear in the last two delegations of Arab businessmen we received in Brazil, both including importers of sector products,” stated CCAB president Antonio Sarkis Jr., referring to the mission organized by the Jordanian Businessmen’s Association, which took place in February, and to the Brazil-Arab Countries Business Meeting, which took place in May, after the Summit of South American – Arab Countries.


“They are now starting to learn about the Brazilian auto parts industry, and that is also very much due to the increase of vehicle exports, which makes auto parts more required,” added Sarkis.


The main destinations in the region are the United Arab Emirates, with imports of US$ 8.6 million up to May, Egypt, with US$ 5.1 million, Saudi Arabia, US$ 2.8 million, Syria, US$ 1.5 million, and Kuwait, US$ 1.4 million.


Automechanika


So as to see this potential more closely, ten Brazilian companies participated in the last edition of the Automechanika, the sector fair that took place in May in Dubai, in the United Arab Emirates.


One of them was OEM, which sent a representative to the event for the second time and has in the market of the region a good share of its products.


“We already have many clients in the region. It was therefore an opportunity to have personal contact with our current clients, to try to make contact with old customers again, and also to prospect,” stated Costa e Silva, adding that the company is going to participate in next year’s edition again, when the Brazilian delegation is going to count on the support of the CCAB.


According to him, 15% of OEM revenues, around US$ 7 million a year, come from sales to the Arabs. Costa e Silva believes that there is potential to reach 30%.


Another company that participated in the fair was Birkson International, which produces electric auto parts such as ignitions, alternators, starter engines, among others.


“Participation in the fair was good, as it increased our group’s business,” stated Ivan Fernandes, a company trader. “We noticed that those who went to the fair wanted to do business,” he added. According to Fernandes, Birkison already has various clients in the region.


Autotravi, from the city of Caxias do Sul, in the southernmost Brazilian state of Rio Grande do Sul, participated in the event for the first time.


“We went there to see what the market is like and the results were good, as we made many contacts. It was the route to the beginning of business,” stated Roberto Frantz, the company export manager who sells profiles and rubber parts to 20 countries.


He recalled that Dubai works as a great distribution center for the products, not only to the Arab countries, but also to other nations in Asia, the Middle East and Africa.


This was the third edition of the Automechanika in Dubai. According to Messe Frankfurt, the company that promotes the event, and it included the participation of over 7,000 exhibitors from 37 countries.


Growing Sector


Last year the auto parts sector had a turnover of US$ 16.5 billion in Brazil. For this year, the Sindipeças forecasts a growth of 12.7% to US$ 18.6 billion. Sector exports reached US$ 6 billion in 2004.


Up to May 2005, shipments had already generated revenues of US$ 2.9 billion, a growth of 33% over the result for the same period last year. The forecast for the end of this year, according to the Sindipeças, is US$ 6.7 billion in exports.


The sector employed 187,000 people up to the end of December 2004. This year, according to the Sindipeças, the estimate is that the number of workers should reach 198,000.


Anba – www.radiobras.gov.br

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