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Customer LoginsFiat Palio close to become best-selling nameplate in Brazil in 2014
It is not a secret that the Volkswagen Group wants to sell more than 10 million vehicles a year by 2018, becoming the world's largest automotive group. However, this year Volkswagen is extremely likely to lose one of its jewels of the crowd: the best-selling vehicle title in Brazil.
Before talking about the Gol, a brief contextualization of Volkswagen in Brazil, where the company opened its first factory outside of Germany in the 1950s, is required. For several years, Brazil was a closed economy and did not allow imports, which made Volkswagen - along with Chevrolet, Ford and Fiat - to be perceived as a Brazilian brand. Volkswagen enjoyed great success, having more than 35% market share in the 1990s. But in 2001 it lost the top spot to Fiat - and never came back.
Globally, Brazil has always been a critical market for Volkswagen. In the early 2000s, the company sold more cars there than in the U.S. or in China. Sales in China started skyrocketing in 2009, performance in the U.S. slipped, and Brazil has taken turns with Germany as the brand's second main market since 2010.
VW brand Top 5 countries by sales
Much of Volkswagen's success in Brazil came from the Gol, a B-segment hatchback developed in the country to replace the original Beetle and named after soccer's main accomplishment (goal, in English). Synonym with reliability, the Gol was launched in May 1980 and gave birth to a station wagon (the Parati, not in production any longer), a sedan (the Voyage, at one point exported to the U.S. as Fox) and a pickup (the Saveiro, which sells only half of its main competitor, the Fiat Strada). The Gol became the best-selling nameplate in Brazil in 1987. It was the first locally-built vehicle to feature electronic injection in 1988 and a flex fuel engine in 2003.
However, competition has fiercely increased in Brazil. Honda, Renault, PSA Peugeot Citroen opened plants in Brazil in the late 1990s and early 2000s, while Toyota built a second one to make the Corolla. A newer wave brought Hyundai and Nissan - and another Toyota plant. With new plants, an expanded dealer network that offered more options in all segments was bad news to Volkswagen, especially in the B-segment, Brazil's most important. Volkswagen itself expanded its offer in the segment, with the Polo and the Fox.
Nevertheless, the Gol has always secured the top of the registrations ranking. Until this year. Apart from increased competition, the Gol is now sold as only one model. In 2014, new legislation requiring all vehicles to feature airbags and ABS forced Volkswagen to retire the previous-generation Gol. However, Fiat was able to make a running change to add these features to the older Palio. In other words, Volkswagen is selling one car under the nameplate Gol, while Fiat is selling two models under the nameplate Palio.
Because of that, Volkswagen says the comparison is unfair - but forgets it did the same until earlier this year. Until October, 147,148 Gol had been registered, 1,770 units more than the Palio. But the Gol lost track during the year. In January, when Volkswagen was still able to sell some units of the older Gol, the difference was 9,390 in favor of the Gol. In October, Fiat was 4,174 units ahead. Preliminary registration data put the Gol 3,375 units behind the Palio in November - the Volkswagen model ended the month in third place, behind the Chevrolet Onix as well.
For the Gol to end as the best-selling nameplate this year, Volkswagen would need to have more than 17,000 Gol registered in December, while a little over than 12,000 were registered monthly between September and November. Our light vehicle forecast does not account for such high volume. Additionally, a new Gol was scheduled for next year, but the company changed its plans and will not substitute the current model until 2018. The silver lining for the Germans is that the Gol can return to the top spot after 2016, when IHS Automotive expects the Palio to become only one vehicle as well.
Gol, Palio registrations in Brazil | ||||||
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
Gol | 297,967 | 291,551 | 293,227 | 255,021 | 171,391 | 159,631 |
Palio | 130,877 | 109,741 | 182,437 | 171,848 | 175,460 | 168,671 |
Source: IHS Automotive. 2014 and 2015 are forecast volumes
By then, the Gol may lose its footing in Argentina as well, where it has been the best seller since 2003. Volkswagen has lost one generation under the Gol nameplate in Argentina as well, but is also facing difficulties to import from Brazil - as other OEMs are. Therefore, advantage goes for vehicles built in Argentina, like the Renault Clio and the Toyota Hilux, which should have an extra market appeal next year when Toyota will launch an updated pickup.
With Gol registrations down 29.9% through October, Volkswagen is the brand that is losing more ground in Brazil this year. In a market that is down 8.8% through October, Volkswagen has plummeted 14.7%. It did not replace the Kombi (the old Minibus), and its main launch this year, the up!, is selling much less than the company expected. But still, Volkswagen has been very busy. For example, it created new colors: from the 13 colors it had in 2010, it now offers 23 options.
For next year, we do not expect new products, except for the localization of the Jetta and Golf, currently imported from Mexico. That will not make volumes grow. So far, the only confirmed change in 2015 is a new president. Thomas Schmall will fly to Wolfsburg to be on the brand's board of management responsible for components effective January 1, and David Powels will leave the company's top spot in South Africa to be its president in Brazil.
Augusto Amorim is senior analyst, South American light vehicle production forecast, IHS Automotive
Posted December 6, 2014