Automotive - Industry - South America Market, Share and Trends 2023-2028

Summary of Automotive

With global automobile sales amounting to some 63.8 million vehicles in 2020, the automotive industry is among the most important in the world. In Latin America, Mexico and Brazil have the most developed sectors – Mexico produced just shy of 3.2 million motor vehicles in 2020, while the production of vehicles in Brazil added up to just over two million units that year. In fact, these two Latin American countries ranked amongst the largest motor vehicle producers worldwide. When it comes to sales, however, the region has struggled since way before the coronavirus pandemic.

As the market witnesses a surge in the demand of aluminium forged components. These components are particularly favoured due to their exceptional weight reduction qualities. Hence, by incorporating aluminium forged parts into vehicles – automakers can achieve significant improvements in fuel efficiency – which is a crucial factor in today’s environmentally conscious world.

In Brazil and Argentina – the two largest Mercosur member countries – state and local governments have lured foreign investors by providing auto manufacturing and other industries with a variety of incentives. Based on our estimates, we can say that South America’s regional Automotive industry is forecasted to be a $130.45 billion industry in 2029 from $80.48 billion in 2023 with a CAGR of 7.99%.

Attracted by explosive economic growth in South America, original equipment manufacturers from around the globe have stepped up their investment and operations in the region. As industrial automotive OEMs expand their trail into South America’s rural areas, they’re inventing new ways to address their most pressing challenge: building a supplier network that can deliver the same value the OEMs enjoy in other parts of the world.

Recent Trends and Insights

The market is recovering slowly, with sales increasing in countries experiencing stronger economic recoveries like Peru, Colombia and Paraguay. However– Brazil and Argentina still face headwinds.

SUVs remain the most popular vehicle segment as rising incomes boost demand for larger vehicles able to navigate diverse road conditions. Popular models include the Chevrolet Tracker, Volkswagen Tiguan and Toyota SW4.

Electric vehicles represent a small but growing portion of new vehicle registrations, especially in Chile where policies support EV adoption. Companies like BYD Auto are partnering with local governments on e-bus and taxi programs.

Connectivity and autonomous driving technologies are being tested and implemented gradually – with pilots of self-driving farm equipment – mining vehicles and public transport.

OEMs are investing in new product lines and capacity expansion in countries with more stable growth, while cutting underutilized production facilities in Brazil. Local sourcing of components is also increasing.

Owing to the stringent exhaust emission norms imposed and the incentives provided by several governments in the region are the prime drivers of sales in the countries in South America. Because of Brazil’s growing demand for electric vehicles, several players are investing in starting a manufacturing plant there.

Product Insights

SUVs and pickup trucks remain immensely popular, with models like the Chevrolet S10, Ford Ranger and Volkswagen Amarok dominating local roads and farms. Affordable hatchbacks and sedans also have strong demand, led by the Renault Sandero, Fiat Palio and Toyota Yaris. These offer reliable transportation at an accessible price point.

Electric vehicles are gaining a foothold in particular market segments – for example, BYD supplies electric buses across several major Chilean cities. Connected vehicle technologies are being tested through pilots pairing GM vehicles with Movile’s digital platform in Brazil, integrating services like emergency assistance.

Autonomous farm equipment manufacturers like John Deere are partnering with regional dealers to support precision agriculture adoption. Mobility startups in countries like Colombia and Peru are launching new shared electric scooter and motorcycle models to meet the needs of rapidly growing urban populations.

Other notable activities within the area are – in July 2023 – BYD, the Chinese electric vehicle giant, invested USD 624 million to build its first plant outside of Asia in Brazil. This is part of the company’s plan to expand its global reach amid a surge in sales. Similarly– the demand for low-emission vehicles such as – battery electric automobiles and hybrid electric vehicles – is constantly increasing in Argentina.

Key Companies

Some major players within this vast domain of industry are

• Stallantis
• General Motors
• Toyota Motor Corporation
• Nissan Group
• Volkswagen AG
• Hyundai Motor Company
• Nissan Motor Company Ltd
• Daimler AG
• Groupe Renault
• Kia Motor Corporation

Regional Analysis

Vehicle sales are rebounding from economic downturns in countries like Brazil and Argentina as inflation slows and consumer confidence improves. Even though there is an upscaling trend of the automotive sector, the growth is only gradual.

OEMs are investing more in developing electric, autonomous and connected vehicle technologies tailored for the region’s road conditions and consumer needs. Local governments are implementing policies like import tariff reductions and corporate tax breaks to attract more vehicle assembly plants and boost domestic manufacturing.

Mobility startup investment is growing in areas like ride-hailing, car-sharing and electric scooter/bike rental to meet expanding mobility demands across both urban and rural landscapes. Connectivity and over-the-air update capabilities are gaining importance as automakers aim to deliver new in-vehicle services to customers across diverse South American geographies.

The region has also established new free trade agreements with 38 countries including the Association of Southeast Asian Nations (ASEAN), China, European Union and NAFTA countries. In addition– Peru is negotiating trade agreements with nine other countries, including Australia, New Zealand, Thailand and Turkey.

The auto parts market is also supplied both domestically and from abroad. The main source markets for the purchase of auto parts are China, Japan, South Korea, India and Brazil. Supply is intended mainly for the mechanical repair and spare part industry.

Market Segmentation

By Type:

• Connected vehicle technologies (telematics, infotainment, OTA updates)
• Advanced driver assistance systems (ADAS)
• Electric powertrain components
• Vehicle safety systems
• Automotive manufacturing equipment
• Industrial automation solutions

By End user:

• Original Equipment Manufacturers (OEMs)
• Automotive suppliers
• Mobility service providers
• Infrastructure providers
• Automotive dealerships

By Enterprise Size:

• Large automakers
• Mid-size vehicle manufacturers
• Component and parts suppliers
• Startups in mobility, EV, and self-driving technologies

By Countries:

• Brazil
• Argentina
• Columbia

Our Methodology

We have offered a well-founded review of the South America’s regional Automotive market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.