Rio Grande do Sul aims to consolidate its automotive industry as a global player in the segment of vehicles and components. The State has a favorable environment for the installation of new industries in the segment, which represents an important part of the industrial production and has suppliers of raw materials, skilled labor and institutional expertise. The Serra and Metropolitan regions concentrate the supply chains for the automotive sector (metal-mechanic, plastic, rubber and electro-electronic). Most of these companies are organized in the Metal-mechanic and Automotive Local Productive Arrangement (APL) of Serra Gaúcha and are supported by the State Government. They seek to promote the consolidation of metal-mechanic and automotive companies of the region, by providing high quality of services and products, as well as their partners, to enable entrepreneurial development, technological innovation and the growth of the broader community.
The manufacturing industry of motor vehicles, trailers and bus bodies1 is present in 109 cities of Rio Grande do Sul. In 2012, the State had 705 establishments that employed 52,103 people. The cities of Caxias do Sul, Porto Alegre, São Marcos, Gravataí, Canoas and São Leopoldo account for 51% of these establishments. Caxias do Sul, Gravataí, Porto Alegre, Erechim, São Marcos, Canoas and São Leopoldo account for 87% of the jobs2.
In 2016, Rio Grande do Sul was the fourth largest producer of motor vehicles in Brazil, accounting for 6.9% of the national production3. The General Motors (GM) plant in Gravataí is considered the company's largest and most productive plant in the Southern Hemisphere. The State also has bus manufacturers (Marcopolo and Neobus), trucks (Agrale), agricultural machinery (AGCO, John Deere) and road implements (Guerra and Randon), which have boosted the creation of support segments and a diversified supply chain,as well as a broad base of auto parts companies. Rio Grande do Sul has a significant share in the Brazilian production of automobiles (ranking 4th) and in the production of bus bodies and road implements (ranking 1st).
The state has a privileged geostrategic position, which provides easy access to important automotive markets in Brazil and Latin America, such as São Paulo and Buenos Aires. It also counts on the maritime Port of Rio Grande, which allows the export of manufactured products and the import of raw materials and equipment. Given the internal crisis faced by the automotive sector in Brazil and the devaluation of the Real since 2014, the share of exports in the companies’ revenues has been increasing significantly. In the first half of 2017, the Brazilian automotive sector reached its highest volume of exports, with 372.6 thousand units shipped to other countries, an increase of 57.2% compared to 236.9 thousand in the first half of the previous year4. Brazilian exports are expected to account for a significant portion of revenues in the sector, which makes the competitive advantages of Rio Grande do Sul even more relevant.
Rio Grande do Sul has a consolidated industrial policy dedicated to the expansion of investments in the automotive segment. Several programs, including the Fund Operation Company (Fundopem) and the Program for the Production Chain of Cargo Transport Vehicles (PROCAM) provide the projects with the necessary conditions for competitive installation, offering tax incentives, credit lines dedicated to the segment and areas in industrial districts. In 2017, a new policy of tax incentives targeted to suppliers of local automakers, to promote the auto parts industry was sanctioned by Rio Grande do Sul’s government.
The automotive industry is undergoing several transformations: Within a short period of time there will be a new concept of mobility, business and production organization. Vehicle electrification, connectivity, industry 4.0 and autonomous driving, among other phenomena, constitute a new technological and mobility paradigm. This new configuration becomes a major challenge for all agents participating in the arrangement that supports the automotive sector and, therefore, a new integrated approach is required. The search for quality and competitiveness will only be possible with collaboration. Therefore, the State must provide the automotive segment with the necessary support to face the coming changes.
Sector opportunities in Rio Grande do Sul
- The installation of a manufacturer of medium-duty and heavy-duty trucks in Rio Grande do Sul is viable, given the projected growth of demand in Brazil in 2018-2019, motivated by a fall in the inflation rate, lower interest rates and record harvests in agribusiness5.
- The installation of the Chinese light-duty truck assembly plant Foton in Guaíba and the new investment of R$ 1.4 billion from GM automaker located in Gravataí to modernize the automotive park, create significant opportunities for the establishment of suppliers of auto parts in Rio Grande do Sul. In 2017, some changes have been made in Fundopem to encourage the installation and operation of companies that supply parts and tools to automotive vehicle manufacturers present in Rio Grande do Sul. The new tax incentives are a great opportunity for companies that supply auto parts to settle in the state of Rio Grande do Sul, in order to integrate the supply chain of large automakers such as GM.
- Aware of the technological developments in the automotive sector, companies, universities and the State Government are developing the Center of Reference in Urban Mobility and Future-Bearing Technologies focusing on research in the fields of autonomous driving, advanced manufacturing, electrification of vehicles and connectivity and advanced materials. This project provides an excellent opportunity for the joint development of research with leading institutions.