Latin American Auto Industry

There are at least two ways of assessing the current state of the Latin American automobile industry and of the competitive challenges posed by Chinese companies. The first is to conclude that there is a troubled outlook ahead. In this view the global lurch towards protectionism and tariff uncertainty led by the Trump administration looms large. At a macro level there is a significant risk of a slowdown in the US economy amid concerns over the trade war with China, the fiscal deficit, interest rates, and inflation. Washington’s tariffs will probably remain high enough to shut Chinese companies out of the US market. An erosion of market confidence will lead to a reduction in economic activity and lower car sales across Latin America. On the more micro-level, the spike in uncertainty will force individual manufacturers to postpone investment decisions. There may be more stalled projects like Tesla’s Mexican gigafactory in Nuevo León, or BYD’s re-working of the Camaçarí site in Brazil.

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