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PROCONVE Norms and INOVAR Directive to Drive Powertrain Technology Uptake

Brazil is a flex-fuel dominated market, and the advancement in powertrain technologies revolves around the sustainable fuel matrix. OEMs and suppliers, in response to growing consumer demand, emission norms, and taxation structure, are expanding their presence in the market to operate as a strategic hub for the future of automotive production and sales. This study is a 360 degree, holistic view of the future of powertrain and engine technologies uptake in the Brazilian passenger vehicle market. It discusses technologies such as engine boosting, direct injection, electric vehicles and hybridization, and also looks at the Brazilian transmission mix and key OEM profiles before concluding with key predictions towards 2020.

Key Findings

About X– per cent of all vehicles produced in Brazil by 2020 will be flex fuel that accounts for about X– million vehicles.

1
• Flex Fuel Vehicle (FFV—Up to E100) currently accounts for about X per cent of production in Brazil, and its dominance is expected to continue towards 2020 with an estimated penetration of X– per cent.
• Gasoline in Brazil (E18–E25) is estimated to account for about X– per cent of the market production by 2020. Over X per cent of the current gasoline production is aimed at the export market for Mercosur regions, such as Argentina.
• The ban on the use of diesel for passenger vehicles (PVs) with a pulling capacity of less than Xkgs is expected to restrict the production of diesel vehicles to about X– per cent by 2020. In an optimistic scenario in which the ban is removed, penetration is expected to grow to about X– per cent.
• Production of B and C segment vehicles will account of over X per cent share in Brazil by 2020 with vehicles such as the Gol, Palio, and Fiesta being amongst the key models.

2
Transmission Outlook
• Manual Transmissions (MTs) are expected to dominate, in terms of production, with a share of over X per cent and the AMTs accounting for over X per cent by 2020.
• MTs will continue to be the mainstream transmission type in Brazil by 2020 with an estimated per cent of sale of over X per cent. Automated Manual Transmissions (AMTs) and Automatic Transmissions (AT) will account of the majority (aboutX per cent) of the remaining market for transmissions. DCTs and CVTs will account for over 10.0 per cent of the market by 2020.
• Currently 4-speed ATs, 5-speed MTs, and AMTs such as the Dualogic and EasyTronic account for the majority of an original equipment manufacturer’s (OEMs) transmission portfolio and this occurrence is expected to continue with higher speed transmissions by 2020.


Fiat-Chrysler, VW, Ford, and GM expected to continue their dominance with over X per cent market share in 2020.

3
Engine Technologies
• Engine Downsizing: About X– per cent of the engines produced and sold in Brazil by 2020 are expected to be less than or equal to XL. About X– per cent is expected to be in the XL– L bracket, with the XL, XL, and X L constituting the majority.
• Turbocharging: About X– per cent of all flex fuel vehicles and about X– per cent of all gasoline engines are expected to be turbocharged by 2020. VW, GM, Ford, and Fiat are expected to be the key OEM with the turbocharging of flex fuel.
• Direct Injection: Over X per cent of all flex fuel engines and about X– per cent of gasoline engines are expected to have direct injection by 2020. Cost and primarily the production of B and C segment vehicles in Brazil are the key factors that affect penetration in 2014 and beyond.
• All OEMs are expected to actively adopt variable valve timing and variable valve actuation (VVT/VVA) for flex fuel, with Fiat, Toyota, and Honda being amongst the key adopters.

4
OEMs and Suppliers
• Fiat-Chrysler, VW, Ford, and GM are the big X that currently constitute over Xper cent of production market share. By 2020, Fiat-Chrysler (X– %) and VW (X– %) are expected to account for about Xper cent of the unit shipment market share.
• In terms of vehicle sales, Ford, VW, Fiat, Hyundai, and Renault expected to increase the penetration of dual clutch transmission (DCT), while Toyota, Nissan, and Honda will focus on continuously variable transmissions (CVT).
• Suppliers in the Brazilian market are expected to focus on innovations and advancements in flex fuel technologies. Offering entire engine/transmission/powertrain packages is expected to be the way forward for suppliers to capitalize on opportunities.

Key Conclusions and Future Outlook

Powertrain market to grow to about X– million production by 2020, with flex fuel accounting for over X per cent.

Market Status
Current–2011: The powertrain market is currently at about X– million production, with over X% comprised of flex fuel and diesel for about X%.
Future–2020: The market is expected to grow to about X– million production by 2020, with flex fuel still accounting for over X%. Sales of vehicles are estimated to reach aboutX– million by 2020, primarily consisting of B and C segments.

Competition
Current–2011: The powertrain market in Brazil is extremely concentrated with the big 4; that is GM, VW, Ford, and Fiat-Chrysler accounting for over X% share
Future–2020: A number of Chinese and Asian competitors such as JAC, Chery, BYD, Toyota, Honda, and Hyundai, are expected to vie to gain the Brazil market share which accounts for over X%. Competitive low prices and a focus on small and compact cars with 1.0–1.4L engines are the most common, along with manual 5-speed MTs and VVT technology, which conceptualizes their strategy to develop Brazil-specific FFVs. The INOVAR directive will drive more domestic production, increasing the number of competitors including BMW and Daimler.

Solutions
Current–2011: Ethanol fuel is still the preferred type accross the country, pushing sales of flex fuel engines and maintaining its dominance. Diesel also has a mandated B5 requirement and gasoline of about E18-E25
Future–2020: Flex fuel engines are still expected to be dominant. Hybrid vehicles with flex fuel capabilities may gain minimum prominence. The use of diesel fuel for all light passenger vehicles is expected to take place, due to the efforts of OEMs and lobbyists groups in the region.

Technology
Current–2011: Automatic transmission is starting to become more available in all vehicle segments, in view of demand from customers for more sophisticated and comfort-driven tranmissions. Turbocharging and GDi in gasoline engines is seen to have a growing market.
Future–2020: Lightweight construction, eco-driving assist, and multi-functional control displays are expected to gain prominence with a growing premium car market and “fluidic” design philosophy (e.g., Hyundai). The engine downsizing trend is expected to persist, supported by new direct injection and turbo charging technologies.

Value Proposition
Current–2011: Due to the competition increase in the local market, companies are being forced to offer more for less. New popular models are being launched with attractive prices targeted to the lower middle class, but also offering more optional packages that were previously available only to high end segments.
Future–2020: The global platform strategy is poised to be pursued by the majority of the main market leaders launching American and European models in Brazil, benefiting from economies of scale and an integrated supply chain system. Turbo-downsizing, direct injection, VVT/VVA, and hybridization are amongst key technologies that are expected to add value to consumers by offering state-of-the art technology at competitive prices, reducing emission, and enhancing performance.

Key Questions This Study Will Answer

• How is the future landscape of the Brazilian powertrain market expected to change as we approach 2020? What are the most dominant fuel and transmission types? What is the unit shipment production of powertrain systems in Brazil in 2011 and what is the forecasted production growth from 2012 to 2020?
• Which are the key OEM participants in the market and how is the competitive landscape of the industry changing? Who will emerge to be market leaders and sustain growth in the market?
• What are the key factors driving the change in powertrain market? Do emission limits, taxation structure, and government mandates define the innovation that may be possible as we approach 2020?
• What is the sustainable energy mix that is being followed in Brazil? Will hybrids and engine technologies such as turbocharging play an important role?
• What are the pertinent indices to measure the performance of powertrain systems? How will these systems evolve over the coming years to match the market demands? What are some of the key conclusions with which to tackle and understand the dynamics of the current and future powertrain market in Brazil?

Table Of Contents

Future of the Powertrain Market and Engine Technology Uptake Analysis in Brazilian Passenger Vehicles 
Table Of Contents

1. Executive Summary
2. Research Scope, Objectives, Methodology, and Background
3. Definitions and Segmentation
4. Market Overview
5. Mega Trends and Industry Convergence Implications
6. Total Power Train Market
- External Challenges: Drivers and Restraints
- Forecast and Trends
- Powertrain Technologies—Total Market (Boosting Technologies, Injection Technologies, EV Market)
- Market Share and Competitive Analysis
7. Flex Fuel Segment Breakdown
8. Gasoline Segment Breakdown
9. Diesel Segment Breakdown
10. Transmission Technology Segment
11. OEM Profiles
12. Conclusions and Future Outlook
13. Appendix


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