Brazil overtook Russia and Belgium in the first five months of this year to become the world’s largest importer of Chinese cars, buying US$5.2 billion worth of vehicles as brands raced to land shipments before a tariff increase took effect in July.
The figure, drawn from Chinese customs data, is up 146.9 per cent from the US$2.1 billion recorded a year earlier, when Brazil ranked sixth among buyers. Russia bought US$5 billion over the same months this year and Belgium purchased US$3.8 billion.
Electrified models drove the surge, accounting for US$4.5 billion of the total. April and May alone contributed US$2.7 billion, a concentration consistent with stockpiling ahead of the duty change rather than sustained demand.
Brazil also topped the global ranking for electric and hybrid vehicles specifically, ahead of Belgium and Britain.
Electric and hybrid models made up 87 per cent of Brazil’s vehicle imports from China last year, against 33 per cent in 2021, a shift that has remade the composition of the trade in five years.
Figures from Brazil’s foreign trade secretariat compiled by the Brazil-China Business Council put first-half purchases at US$5.35 billion, more than double the value of all vehicles imported from France.
Plug-in hybrids accounted for just over half of that at US$2.79 billion. Electrified vehicles now represent roughly 15 per cent of everything Brazil buys from China.
A record set as Brasilia reverses course on Beijing
The buying spree coincides with the sharpest realignment in Brazilian trade policy in a decade.
On Sunday, Brazilian President Luiz Inacio Lula da Silva and his Chinese counterpart Xi Jinping agreed by telephone to accelerate negotiations on a trade agreement between China and Mercosur, a deal Brasilia spent years working to keep off the bloc’s agenda.
The call came days after a 25 per cent tariff imposed by US President Donald Trump on part of Brazil’s exports took effect, followed by a further 12.5 per cent levy announced last week on 60 trading partners including Brazil.
Lula told Xi his government remained committed to diversifying its markets. Brazilian negotiators asked only for unspecified “necessary flexibilities” for sensitive sectors.
According to the National Bureau of Statistics, China’s economy grew 4.3 per cent in the second quarter, below forecasts and short of the 4.5 to 5 per cent annual target, while exports rose 27 per cent in June.
Vehicle shipments abroad climbed 71.2 per cent that month to 1.06 million units, with BYD accounting for about 175,000 of them, or 43 per cent of the company’s output.
Carmakers press their case
Anfavea, the association representing established manufacturers in Brazil, has spent 18 months building an argument the numbers now reinforce.
In January last year, under then president Marcio de Lima Leite, the group commissioned a study into alleged Chinese dumping and called on the government to investigate BYD and Great Wall Motors. Both companies denied the accusation at the time.
The association has since backed the decision to let a tax exemption on dismantled vehicle kits expire, arguing that simplified assembly generates fewer supply chain jobs than full manufacturing.
Igor Calvet took over as Anfavea president in April last year, with Lima Leite moving to the vice-presidency.
Brasilia has answered with a two-track policy that is increasingly difficult to reconcile. Import duties on electrified vehicles rose to 35 per cent at the start of July from the 25 to 30 per cent previously charged, the final step of a schedule set in 2024.
The increase arrived alongside a renewed zero-tariff quota worth US$463 million for semi-knocked down and completely knocked down kits, which Anfavea protested.
The quota fits a wider federal strategy of drawing Chinese manufacturers onshore, alongside recent incentive programmes that reward energy efficiency and pull in the same direction.
At least eight Chinese brands already build vehicles in Brazil or have announced plans to do so. China has more than a hundred manufacturers.
Consumers collect the dividend
The average transaction price for a new light vehicle in Brazil fell 3.5 per cent in real terms to 152,100 reais (US$29,800) in June from 157,700 reais last year, the first decline since prices began climbing in 2020, according to Bright Consulting. List prices dropped by only 1.5 per cent over the same period.
That divergence between sticker and street price suggests established brands are holding official pricing while widening discounts, bonuses and promotional campaigns to defend share from rivals that took 16.5 per cent of the Brazilian market in June.
The BYD Dolphin Mini, an electric hatchback selling from about US$21,500, outsold every other model in Brazil’s retail market in February, pushing a Volkswagen Crossover into second place.
Electrified vehicles reached 18 per cent of domestic sales in June, more than double their share a year earlier.
Brazil’s automotive trade account closed the first half with a deficit of US$5.32 billion, the deepest since the series began in 1997, as exports stalled on weak Argentine demand and imports reached US$7.79 billion.
China’s share of those imports has risen to 72 per cent from 5 per cent in 2021, leaving the government to reconcile cheaper cars for consumers with the widest sectoral shortfall in nearly three decades.-- SOUTH CHINA MORNING POST
