OREANDA-NEWS. Despite a successful first semester 2013 with strong sales and production increases over 2012, the current economic scenario in Brazil indicates a more conservative outlook for 2013 and 2014: 2013 passenger car sales are expected to stagnate at 3.6-3.7 million for the next 2 years with more attractive growth of 10% per year coming only from the commercial vehicles sector, which is finally recovering from its crisis. However, according to the Roland Berger barometer entitled “The Brazilian profitability challenge - Ensuring sustainable margins for automotive suppliers,” small overall industry growth will negatively impact total performance of automotive suppliers operating in Brazil.

“Although Brazil has a track record of profitable business in the automotive sector, recent figures indicate that suppliers based in the country are facing a tough road ahead. A huge drop from the 2008 EBIT margin of 8.7%, last year was much less profitable for the first time in decades, with average margins of 2.5% in 2012,” says Stephan Keese, Partner and Head of the Automotive & Industrial Goods practice in South America. And what the most conservative players in the industry consider to be rock bottom is actually just the tip of the iceberg: Roland Berger Strategy Consultants forecasts an extremely thin margin of around 1-2% for 2013. “As mature markets are recovering - the global automotive supplier industry's average EBIT margin will remain stable at 6.5% - suppliers' head offices are expected to keep a close eye on their Brazilian operations in the near future,” adds Martin Bodewig, Principal in Roland Berger's Automotive & Industrial Goods practice in South America .