This Tuesday (9), at the unprecedented Anfavea Visions forum, the president of Stellantis South America, Herlander Zolawarned about the structural factors that threaten the competitiveness of the Brazilian fleet and automotive industry compared to the Asian market.
According to the executive, the sector needs to accelerate pace of development of new vehicles to get closer to the newly arrived Chinese women. In Zola’s view, this pace is at risk of worsening due to the disparity in production scale and the proposal to end the 6×1 working day.
Agility as a survival factor
For Zola, the traditional model of Western automakers, based on long cycles of planning and launching vehicles, ends up becoming obsolete given the speed imposed by Asian competitors. The pace of updating needs to change for Brazil to remain in the game, according to the executive.
“In order for us to be competitive, the timing of product development needs to be different from what we had in Western industry”, he pointed out.
The impact of the end of the 6×1 scale on costs
The executive also addressed the possible consequences of the proposed change in working hours currently being processed in the country. He argues that there will be a financial and operational impact on local assembly lines compared to the high workload regime practiced in China.
“From the point of view of production costs, compared to what happens in China, our competitiveness worsens. The hours worked in China during a week are much more significant than those we will have in Brazil if the model discussed is approved”, he states.
Despite this, Zola emphasizes that the industry must adapt to government decisions.
“The rules that involve the government are not rules that we are going to discuss. […] Our role here is to try to adapt to the rules that the government defines, to try to clarify and explain the impacts we suffer from certain decisions, and the biggest one now is the issue of competitiveness.”
The breakdown of the logic of nationalization and the abyss of scale
Historically, the success and profitability of automakers located in Brazil depended on the nationalization rate of auto parts. However, the rise broke this market rule, requiring a stimulus stance on the part of Brasília.
“Over the last few years, the industry has always worked based on localization. The higher the level of localization we managed to obtain, the greater the competitiveness. This is a logic that, at the current moment, is being challenged.”
To try to end the disadvantage scenario, the Stellantis representative argues that the government creates compensation mechanisms based on the volume of components produced locally, at the risk of dehydrating the product.
“It is very important that the government evaluate this entire process, to understand whether there are movements to stimulate the national industry, based on the level of localization. To help equalize the difference between production costs in Brazil and China. Scale has always made a big difference in the automotive industry: we [Brasil] we have something around 3 million cars per year and it is essential that we look at the Chinese scale, which has almost 30 million cars per year.”
