There have been signs that consumer spending in Brazil has slowed down, but the luxury car sector tells a completely different story. Booming sales so far this year confirm that the upper middle class in the country still has money to spend and plenty of it.
Audi has just released figures showing that sales of their luxury models in Brazil have more than doubled in the first five months of this year. BMW reports a 25 per cent rise in the sales of vehicles and both Mercedes Benz Porsche and Jaguar Land Rover confirm similar increases.
Brazil represents the world’s fourth largest car market and the manufacture and sales of vehicles account for a significant proportion of the country’s economy. However, the recent removal of tax concessions on car purchases has led to a slight drop in sales throughout the country in all vehicle types except the luxury sector, which is currently showing record sales figures.
On the back of this boom, several luxury brands have announced major expansion plans for Brazil. At the forefront is BMW that is looking to almost double its sales points in the country with many located in the northeast, the area in Brazil where the economy is expanding fastest.
By the end of the year, BMW will have 48 showrooms compared to just 21 in 2010. Ground has been broken at Araquari in Santa Catalina for the first BMW factory in South America, expected to be operational next year. Jaguar Land Rover is building a manufacturing plant at Itatiaia in Rio de Janeiro.
The decade of gigantic economic growth in Brazil has improved the financial situation for practically everyone in the country. Its effects have been most noticeable among the lower social classes where millions of Brazilians have left poverty and entered the emerging middle class, now an important driver of the economy. However, the transfer of wealth has also occurred in the higher echelons of society where the upper middle class (known as Class A) has expanded considerably and as a result, sales of luxury goods in Brazil are on the increase.
Reporting on the rise in luxury car sales, the Financial Times said there are “signs of pent-up wealth” among social Class A. Analysts expect the phenomenon to continue over the next year as wealthy Brazilians continue to spend on luxury items. These include second homes in sought-after locations such as the northeast, particularly in and around Fortaleza, a favoured holiday destination for Brazilians.
Source: Financial Times