With an unstable economy, automakers see the risk of losing investments

Automakers are already preparing for a drop in production with the negative impacts coming from the country's economic instability

Last Wednesday (08/09), during the publication of the August results of automakers, Luiz Carlos Moraes, president of Anfaeva (association of automakers) said that the negative signs coming from the current political and economic crisis could bring a drop in the demand for investments after a long period of queues due to lack of components in the production lines. Also read this news: Ceará is in advanced negotiations and may receive a car factory from the Chinese automaker Great Wall Motors

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Some problems in car production

According to the executive, they are already having difficulties due to production planning, they started this year with supply and logistics problems. “We already have many issues to manage, and what happened on Tuesday does not help with the resumption”, says Luiz Carlos. Moraes points out that it is not up to them to discuss how this will be resolved and they hope that the Supreme [Federal Court], from a legal point of view, will find a solution for the automaker sector.

“The country's image is no longer good, these latest events create greater concerns in our headquarters. Whenever we discuss with the head offices of car manufacturers, the first part of the meetings is about the country's economic situation. We compete for space with countries with better conditions to receive investments and with a stable institutional environment”, says the president of Anfavea.

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Resumption may affect investments by automakers in Brazil

When the new recovery takes place, the automakers installed in Brazil will need to compete for investments with other countries. And that's where the economic scenario can have a negative influence. In August, production fell 21,9% compared to August 2020. Compared to July, there was a small increase of 0,3%, which indicates problems in both periods. 164 units were assembled last month, a number that includes passenger cars, light commercial vehicles, buses and trucks. The regularization of the assembly lines should only take place in the second half of 2022, a period that will coincide with the presidential elections.

In addition to economic instability, automakers are concerned about the impacts of the lack of rain on power generation.

Luiz Carlos Moraes, also said at the results disclosure meeting that automakers are concerned about the impacts of the lack of rain on power generation. The country is experiencing the worst drought in 90 years, which has been lowering the level of hydroelectric plants and forcing the activation of thermoelectric plants, which generate more expensive energy. According to experts, the risk of a blackout is not ruled out, and there is a need for rationing.

According to Moraes, automakers have been monitoring the scenario on a weekly basis, with information provided by the Ministry of Mines and Energy and also by energy traders. “We are hoping to make it through November [without rationing], and for it to rain again. But we know that the challenge will not be just this year. We will have to continue monitoring in 2022.”