How the vehicle market reflects an impoverished population

There are already more than 515 thousand motorcycles, scooters, scooters and mopeds licensed in Brazil in the first five months of 2022 alone, according to Fenabrave (the national federation of dealers). The growth of this market is 25.61% compared to last year, the best performance in the two-wheel sector in seven years.

We could be celebrating this result – companies in the area certainly are, especially Honda, which has almost 80% market share – but it is not as optimistic as it seems. In fact, it crudely and immediately reflects an impoverished population.

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The scenario is worrying: inflation, unemployment and the basic interest rate in the double-digit percentages; triggering of informal work; minimum wage with no real increase since 2016; average income of the population in constant decline (7% in 2021 alone, according to IBGE). Faced with this poisonous combo, who has the money to invest in a new vehicle?

The first sector within the national automobile chain to feel the symptoms of this sick country was the zero-kilometer automobiles and light commercial vehicles. Which, in the face of the covid-19 pandemic, plummeted in 2020 to less than 2 million units sold and so far has not recovered. In 2022, it risks registering even worse numbers than two years ago.

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Used car sector already bitter retraction due to lack of consumer buy-in (Photo: Internet)

Do you have a crisis in the supply of semiconductors and other raw materials? Certainly, but we are also seeing another phenomenon: manufacturers are abandoning more popular, volume segments, in search of greater profitability per vehicle sold. The batten is considerably higher and only a small portion of the population can jump it.

falling market

Do not believe? Just look at the numbers from Bright Consultant: according to the consultancy, the average ticket for a new car or light commercial vehicle in our market jumped from BRL 80,000 at the end of 2020 to approaching BRL 140,000 in the first half of this year.

Initially, the main beneficiaries of this movement were used and used car dealers, who saw the sales volume in their segment jump almost 19% last year, to more than 11 million vehicles traded.

But the rise in the prices of new models also put pressure on the labels of used cars and, later, on the used market. And then the rope snapped: between January and May of this year the sector not only lost everything it gained in 2021, but it has been experiencing a retraction of almost 21%, two percentage points more than the previous growth.

Now, while zero-kilometer dealers and second-hand dealers scratch their heads in search of solutions, it’s motorcycle sellers who smile for nothing, with growth above 25% Coincidence? None. Even because the scenario is very simple to understand.

Brazilians are poorer, but at the same time they do not stop wanting, craving or needing a newer private vehicle for their transportation. And if you can’t buy a brand new car, go for a new one. And when even a used one becomes inaccessible, you find a way and migrate to a motorcycle. Especially with fuel prices the way they are…

But the values ​​of two-wheel models are also increasing. This year, the appreciation is approximately 1% per month, more or less at a pace similar to that of inflation.

cheapest motorcycles in brazil yamaha factor 125i
Entry motorcycles have become the ball of the market (Photo: Yamaha | Disclosure)

And as the income of Brazilians is not growing, on the contrary, at some point this will be another rubber band that will also stretch to the maximum and generate a rebound effect, retracting right away in the previous sequence. And then the industry will experience a hangover similar to the one experienced today by the new and used car industries.

What to do? There is no mystery: it is necessary to stop the cruel bleeding of inflation – and no, it is not by freezing prices that we will do it –, in addition to generating more and better jobs, which will return the average income of our population to evolve. In theory, it all sounds simple, of course, but in practice…

As long as we have such an unequal income distribution and a much poorer part of the population, we can discuss issues such as taxes or production costs as much as we want, but it won’t do much good.

In an impoverished country, crumbs will always be a priority over high value-added products, such as a vehicle. Even if you really want to buy a new car or a new motorcycle. And that the Brazilian has already demonstrated N times how much he wants.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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