BMW Puts Plans in Neutral as Brazil Stalls on Industrial Policy

(Bloomberg) -- BMW’s Brazil plans are going nowhere.

The country’s luxury vehicle segment is growing in 2018 for the first time in three years, and the German carmaker says it’s selling twice as fast as its peers -- and that’s still not enough with Brazil failing to implement policy, on top of vast uncertainty regarding the October presidential election. It doesn’t help that the country’s struggling to emerge from its worst-ever recession and the currency recently touched it weakest level in two years.

"We need clear policy to have predictability to define our future plans," Helder Boavida, president and CEO of BMW Group Brazil, said in a June 7 interview at the company’s Sao Paulo office.

Bayerische Motoren Werke AG built a factory in Santa Catarina state in 2014 in response to "Inovar Auto," a policy that encouraged automakers to invest in local plants in exchange for lower taxes on imported models. But the plant hasn’t met its profit goals and it "has been a very big challenge," Boavida said. It’s only operating at 50 percent capacity. He declined to provide further target details.

A new policy for the industry, "Rota 2030," has failed to materialize, making investment and strategy virtually impossible to define, Boavida said. The company doesn’t necessarily need government intervention, "but tell us where the government wants to go, where the country wants to go so we can make our decisions," he said.

The good news is that sales of BMW and Mini have been increasing, and the company’s market share is also up. The bad news is that it’s "far short of what our needs are," he said.

"Brazil has an enormous potential," Boavida said, adding that BMW is committed to the country. "We believe in this potential, though it’s a pity that it’s potential that we see being postponed year after year. What is lacking, in fact, is a bit of stability and a little vision for the country to develop."

©2018 Bloomberg L.P.

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