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Business

Brazil holds promise for Japan's auto industry

TOKYO -- Japanese automobile and autoparts makers remain optimistic about the future of their operations in Brazil, as demand for vehicles is expected to grow there as well as in neighboring countries.

Brazil's auto market has been hurt by an economic slump stemming from falling prices of iron ore and other natural resources. A report by research firm MarkLines shows that new-vehicle sales in Brazil, including trucks and buses, dropped 27% to roughly 2.57 million units in 2015, marking the third consecutive year of decline.

Still, the Latin American country continues to attract automakers and autoparts manufacturers from around the globe. The three leading Japanese carmakers -- Toyota Motor, Nissan Motor and Honda Motor -- are all there, churning out cars. Italy's Pirelli is among the major players in the Brazilian tire market, but Japan's Bridgestone is also active, manufacturing tires for passenger cars, trucks and buses at four factories. Asahi Glass began producing automotive glass there in 2014. Other Japanese autoparts manufacturers have also set up shop in the country, encouraged by the growing popularity of Japanese car brands there.

A population of more than 200 million also makes Brazil an attractive market. High production costs are a disincentive, but the government has compelled foreign automakers to manufacture locally by way of high import tariffs. Once beginning local production, however, carmakers can export output to neighboring countries with no or low tariffs under regional trade agreements. For instance, Nissan exports vehicles from Brazil to other Latin American countries.

(Nikkei)

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