BMW and Mercedes defy Brazilian auto decline image

While the general auto market in Brazil has recently transformed from a flourishing emerging industry into a European style decline, the premium segment is still growing as tax incentives make such cars more affordable.

According to two of the country’s automotive associations, the premium segment is now the bright spot in a general market decline of 5%, with luxury cars growing an astonishing 32% during the year’s first quarter.

And, as automakers like Mercedes-Benz or BMW have promised to start building cars locally, their sales also benefit from tax breaks on their imported models.

“This market has demand for this type of vehicle; there are no credit issues with the profile of the premium customer,” said Flavio Meneghetti, president of the car dealership association, known as Fenabrave. “These brands have increased the volume of sales in the entry-level luxury segment.”

“The decision to invest money in the country is a serious and deep decision and goes beyond today’s economic instability, which I don’t think is as dramatic as everyone says,” says Arturo Pineiro, CEO of BMW Brazil.

BMW is investing 200 million euros ($276 million) in its first Brazilian plant, slotted to begin production this year. Mercedes is also following suit, with a 500 million reais investment for a new Sao Paulo plant, to be completed in 2016.

Via Automotive News Europe