Brazil: a paradise in consolidation mode

The manufacturers with an industrial footprint have the upper hand: Chevrolet, Volkswagen and Fiat together account for more than 50% of the vehicle fleet. “Including Ford, which withdrew from the country a few years ago, these four brands alone accounted for more than 90% of total sales around fifteen years ago”, explains Laurent Guerinaud, Director of GiPA Brazil. Today, the competition is more visible, with Japanese (Toyota, Honda), Korean (Hyundai) and French (Peugeot and Renault) brands nibbling away at market share. With an average age of between 10 and 11 years and an average annual mileage of around 10,000 km, this fleet is proving to be a major parts consumer…

This wider variety of makes in the fleet, combined with the long distances involved in this huge market, is bad news for manufacturer networks: the country’s 3,700 dealers (there are no approved sub-dealers) cannot adequately cover the country, un like the 70,000 or so independent repai rers and the same number of small distributors... in addition to the countless tyre fitting outlets and 40,000 filling stations! “The OES category accounts for barely 10% of a market estimated at between 75 and 100 billion reals, depending on the source. The loyalty of motoring clients rarely lasts beyond the three-year warranty period. And while second lines such as ACDelco (Chevrolet) or Mopar (Fiat), which are more aggressive in terms of price positioning, are doing better, the IAM is still largely dominant”, explains Laurent Guerinaud. For Fernando Passos, Vice President Sales and Development Latin America at Nexus Automotive, the reason is simple: “OES prices have historically been very high, which has enabled the IAM to carve out its place in the market. Moreover, private labels are not very developed, proof of the good price positioning of traditional parts suppliers. Although private labels are beginning to develop, they currently account for less than 10% of the turnover of a distributor working in this field”.

While the independent aftermarket has plenty of scope for growth, it is still highly fragmented, with large parts distributors (Comolatti, DPK, etc.) coexisting with a multitude of small distributors. A two-speed distribution system “in which 30 to 40 distributors account for a third of the independent market”, explains Fernando Passos. The network – like the offering – remains fragmented: repairers work with several distributors to find the right part when their usual partner has none in stock.

ITGs have gradually established themselves in Brazil - GAI, ATR, Temot and more recently Nexus - but the phenomenon is still new. “The first steps taken by international groups date back only ten years, and concentration only really got underway five years ago”, observes the director of GiPA Brazil. A young phenomenon, then, but already a structural one.

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