Current developments of the Brazilian automotive industry

Abstract

In the context of the stabilization and economic growth that has followed the Real plan introduced in mid 1994, the latest effort to curb dramatically high inflation, the Brazilian automotive industry has continued to grow following a series of policy changes occurred throughout the 90s. The industry has "boomed" for two consecutive years, achieving record production and sales levels. In 1994 production volume reached 1.5 million units, domestic sales of 1.3 million and 380.000 units exported. And a record volume of 150.000 units of imported vehicles penetrated the Brazilian market. After more than a decade of stagnation and with a poor technological and efficiency performance, this partial success crowns a restructuring process that has implemented lean manufacturing principles as the new industry paradigm and a new set of industrial policies that has liberalized the Brazilian economy and has stimulated the cooperation among the major stakeholders - government, companies, labor. This paper will focus on the most recent economic performance and policy changes in the Brazilian automotive industry, which faces the formidable challenge of being competitive internationally as new investments of US$ 10 billion expected until the year 2.000 to raise the production volume of 2.5 to 3 million.