Brazil's auto sector will face mounting challenges

Significance

Ford, which has been operating in Brazil since 1920, attributed the decision to its global business restructuring plans. However, two other companies, Mercedes-Benz and Audi, had earlier taken similar decisions, highlighting the challenges faced by the Brazilian automotive sector.

Impacts

• The effects of the pandemic on auto sales and production will continue to be felt for some time.
• Further restructuring or plant closures in the auto sector cannot be ruled out.
• The sector is still likely to see some recovery in 2021 following last year’s large contraction.
• Lower-cost automakers, or those focusing on hybrid and electric vehicles, may gain market share going forward.