Latin America Reports

Mixed Fuel Autos Drive Dupont Brazil Sales

By Charles Thurston | September 11, 2006

Brazil's automotive coatings market is growing rapidly due to increased sales of autos offering alternative fuel technology.

DuPont do Brasil sales of OEM automotive paint and coatings have been rising rapidly, thanks to a bullish automotive industry in Brazil and to several years worth of efficiency programs by the company, according to Stephen L. Cox, vice president for the Americas within E.I. DuPont de Nemours' Automotive Systems unit, Troy, MI.

"We were always a significant player in Brazil's automotive market, and now we are the leading supplier," said Cox. "We've accomplished this through a number of different actions utilizing lean enterprise as a methodology and as a total business improvement, combined with Six Sigma quality implementation. In addition, we have improved our capacity and capability at the same time."

Within DuPont's Automotive Systems business unit, the efficiency programs were tried out in Brazil prior to being applied in the U.S. and Canada. The company also has production facilities located in Mexico and Venezuela which serve other areas of Latin America.

Dupont do Brasil bought out Renner, its equal-ownership joint venture partner in Brazil, in 2002, and over the four years that have followed, undisclosed sales have tripled, the company said, however, Cox declined to estimate market share or sales value. Among auto makers that DuPont serves in Brazil are Audi, Fiat, Ford, General Motors, Toyota, Volkswagen and Volvo. DuPont recently has gained supplier shares with Fiat and with Volkswagen.

Brazil's automotive industry, one of the largest and fastest growing in the world, has been thriving over the past few years. During the first six months of this year, 1.3 million cars were manufactured, according to statistics from Associacao Nacional dos Fabricantes de Veiculos Automotores (ANFAVEA), the country's national association of vehicle manufacturers, in Sao Paulo. While production is only up 4.4% year to date, sales have jumped 9.4%, ANFAVEA reported.

Much of the excitement in the domestic sales market can be attributed to "flex fuel" or mixed-fuel cars, which can burn ethanol or gasoline, or any mixture of the two. Over the first six months of this year 589,000 flex fuel cars were produced, while only 438,000 gasoline cars were produced, ANFAVEA indicated. Although flex fuel vehicles were only introduced to the Brazilian market in 2003, by the end of this year, virtually all of the vehicles produced by Fiat, General Motors and Volkswagen will run on flex fuel.

Brazil, which is the largest producer of ethanol in the world, launched its sugar cane-based ethanol industry over 20 years ago. While Brazil also produces oil, the potential for rapidly increasing ethanol production is greater. Brazil subsidizes ethanol at the pump, and many of the country's service stations are operated by the state company, Petrobras.

The automotive market for paint and coatings in Brazil accounts for an estimated eight percent of total paint and coatings consumption by volume in Brazil, and for approximately 17% by sales value, including new and after-market uses.

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