Brazilian Auto Makers Square Off in Competitive Compact-Car Segment

SAO PAULO – Brazil’s domestic market is heating up in the competitive compact-car segment, with most of the major auto makers churning out new models to gain or maintain market share.

This is made more important by the slowdown of compact-car exports the industry is facing due to an unfavorable exchange rate, logistics costs and obsolete models for more demanding international consumers.

The new launches come from a number of auto makers. France’s Citroen, for example, introduced its refreshed C3 ahead of Europe in mid-August to compete in the premium-compact market.

Toyota officially began production of its Etios small car Aug. 16 in Sorocaba. Hyundai this month begins building the HB20 compact hatch at its plant in Piracicaba, São Paulo, which will be inaugurated in November. Volkswagen began selling its restyled Gol GT in July.

The Etios, marking Toyota’s entry in the compact segment, should sticker close to BR35,440 ($17,500). The HB10 will offer a 1.0L engine with a price tag similar to the Etios. The Gol 1.0L base model starts at BR28,350 ($14,000).

Renault late last month unveiled a new version of its Sandero cross/utility vehicle with a more powerful engine. Peugeot in early 2013 will launch its 208 that is based on the Citroen C3 platform.

General Motors’ new family of cars, part of the Onix Project, will be produced at the 12-year-old Gravatai Rio Grande do Sul factory. The compact car will replace the Corsa, which the auto maker stopped making in July.

“The compact market is one of the most highly competitive segments of the Brazilian market, and nearly all the companies are fighting for a niche,” says Francesco Abbruzzesi, general director of Citroen do Brasil.

The price of the revamped Citroen C3, to be built in Porto Real, Rio de Janeiro state, with 1.5L and 1.6L engines, will start at BR40,500 ($20,000). The car will be equipped with airbags and an antilock brake system.

The fully loaded model will have light-emitting-diode cabin lighting and a windshield that offers an 80-degree angle of vision. Most Brazilian windshields have a 35-degree slant.

Abbruzzesi says Citroen has sold 250,000 C3s since the original model’s launch in 2003, which was restyled in 2008. The new C3, which is slightly larger than its predecessor, is based on the same platform as the C3 Picasso multipurpose vehicle.

PSA’s crisis in France, where it plans to close a factory and fire 10,000 workers, is not affecting its expansion plans in Brazil, Abbruzzesi says. “There is certainly some tension related to the crisis in Europe, but the Brazilian company has a life of its own. It is autonomous.”

PSA plans to complete its 5-year, BR3.7 billion ($1.8 billion) investment in Brazil in 2015, which should more than double the factory’s annual capacity in Porto Real to nearly 300,000 units.