Reading time: 2 min
Chinese automakers are rapidly expanding their presence in South America while European manufacturers face setbacks from political delays to a crucial trade agreement, reshaping the region’s automotive landscape.
Chinese Brands Drive Market Growth
Brazilian auto group CAOA exemplifies this shift, with the company doubling production at its Anapolis plant from 30,000 vehicles in 2023 to 60,000 in 2024, expecting to reach 70,000 units this year. The family-owned company, founded in 1979 by Carlos Alberto de Oliveira Andrade and now run by his sons Philipe and Carlos Alberto, plans to begin manufacturing vehicles for Chinese brand Changan later this year alongside existing Hyundai and Chery models.
The trend extends beyond Brazil. BYD, the world’s largest electric vehicle maker by sales volume, marked a significant milestone in Argentina when its dedicated car carrier BYD Changzhou docked for the first time on January 20 at the Port of Zarate. The vessel, capable of transporting 7,000 vehicles, delivered 5,841 cars including fully electric models and hybrid SUVs. Unlike many competitors, BYD operates through a wholly owned subsidiary rather than local partnerships, maintaining Chinese control over nearly the entire value chain.
Brazil’s car market analyst Bright Consulting projects that by 2030, every fifth new car sold in Brazil will come from China. Uruguay is experiencing similar growth, with the Uruguayan Automobile Association reporting a 147% jump in electric vehicle sales in 2025.
Policy Changes Accelerate Chinese Entry
Argentina’s libertarian President Javier Milei has introduced policies favoring this expansion. His administration liberalized the hybrid and electric vehicle market and established an annual quota allowing 50,000 cars to enter duty-free, avoiding the standard 35% import tariff. This quota, potentially lasting through 2029, could permit up to 250,000 vehicles to enter Argentina without tariffs. BYD has set a medium-term target of exporting 50,000 vehicles annually to Argentina, aligning with these policy changes.
European Setback
European automakers had anticipated strengthening their position through the recently signed EU-Mercosur free trade agreement covering Argentina, Brazil, Paraguay and Uruguay. However, the European Parliament referred the deal to the European Court of Justice for legal review on January 21, introducing uncertainty and raising questions about Europe’s reliability as a trade partner.
Germany’s auto industry association VDA had expressed optimism about the agreement’s potential to reduce Mercosur tariffs, which currently range from 14-18% on vehicle parts to 35% on new cars. A VDA spokesperson told DW that the deal would create significant opportunities for the automotive industry while strengthening Mercosur countries’ economic development through increased export opportunities.
Market Implications
The developments signal intensifying competition across Latin American car markets, with Chinese manufacturers gaining momentum while European companies face regulatory delays that could undermine their competitive positioning in this growing region.
Sources: The Guardian, Dw, Globenewswire
