São Paulo recovers share in the domestic production of vehicles

State production represented 45.3% of the total domestic production, 2.5 p.p. higher than in 2013, which makes São Paulo the only state among the three main producing states to consistently increase its share over the past three years

Even facing a number of challenges in the Brazilian economy and a complex scenario in foreign trade, the automotive industry in São Paulo manufactured 1,437,256 vehicles in 2014, according to the National Association of Vehicle Manufacturers (Anfavea). These figures represent 45.3% of the total domestic production, 2.5 p.p. higher than the share in 2013, which makes the state of São Paulo the only one among the three main producing states (SP, MG and PR) to consistently increase its share over the past three years.

“These results prove that São Paulo is still the main source of the Brazilian automotive market,” said Juan Quirós, president of Investe São Paulo, investment promotion agency of São Paulo State Government, associated with the State Department of Economic Development, Science, Technology and Innovation.

In 2014, the sector evolved in terms of production processes, applied technology, innovation and product development. But that’s not all, according to Quirós. “Multinationals have built or expanded operations in São Paulo and new industrial plants were opened, which allowed the recovery of the percentage of share in the domestic production that the state had in the end of the past decade,” he added.

The Agency has assisted 22 projects in the automotive sector in São Paulo so far. Among them are the main industrial developments built in the state over the past years, such as the plants of Hyundai, in Piracicaba, and Toyota, in Sorocaba. Only in 2014, five projects of this segment that were assisted by Investe SP started their operations, with special mention to Chery’s plant, in Jacareí, the expansion of Hyundai’s stamping unit and Toyota’s engine laboratory. This year, for example, Mercedes-Benz has already laid the foundation stone of its newest industrial plant in the state of São Paulo, with the support from Investe São Paulo. Located in Iracemápolis, the plant is expected to start operations in January 2016.

Network of suppliers

The arrival of these automakers in São Paulo, in addition to stimulating the local economy, has attracted many foreign suppliers that complement the production chain of the sector. Only in the list of companies that arrived in Brazil assisted by Investe SP, eleven operate in the production of parts, engines and other components involved in the production of vehicles.

“Investe SP provides support to the entire chain of the automotive industry, regardless of the company size or the product manufactured. The construction of a major automaker changes the destiny of a city. Hundreds of direct and indirect jobs are created and a signification portion is generated by the network of suppliers established in the region,” said Quirós.

Global platform

Over the past few years, major automakers have been investing on global production platforms, thus enabling the creation of an increased number of models that share parts and components, with a significant reduction in development costs.

In this new scenario and with the implementation of Inovar Auto, the national automotive industry has evolved rapidly. The program establishes criteria such as energy efficiency and the increased safety of vehicles produced to reduce the Tax on Industrialized Products (IPI), thus fostering innovation. By introducing improvements in the production processes and attracting new suppliers, the Brazilian product becomes increasingly globalized.

As the main highlight of the national automotive production, the state of São Paulo has attracted large investments in research and development (R&D), such as the Engineering Research Center of PSA Peugeot Citroën and the São Paulo Research Foundation (FAPESP), announced in the end of 2014.

"In the renowned universities, technology parks, research institutes and development agencies of the state, multinationals of the sector find all the conditions to develop differentiated and competitive products for the global market," concludes Quirós. 

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