Revista Dealer Edição 35 - Inglês by Fenabrave mcepress

35 June - July 2012

National Federation of Automotive Vehicles Distribution Bimonthly Publication

INTERVIEW

MARKET

FENABRAVE RADAR

Jon Sederstrom, managing officer of J.D. Power Brazil, says that customerâ&#x20AC;&#x2122;s voice is essential for automotive industry development.

Market of imported items drops after taxation changes.

XXII Congress and ExpoFenabrave take place in August. Fenabrave TV promotes training courses for field reporters.

editorial

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More than ever, one must have excellence in management! Flávio Meneghetti President of Fenabrave

e are starting the second half of the year and we may say that we expected a far better year result than what is happening. We will walk sideways in cars and light commercial vehicles. In other segments, except bus, we will have significant drops, totalizing retraction of 1.47% for all industries combined, according to our economic advisory services which reviewed the GDP growth for 2% this year. It is true that, if were not those incentive actions announced on May 21, the projections would be even more negative.

Therefore, when I refer to ourselves as industry entrepreneurs rather than dealers it is because the market reality will demand us to be more entrepreneurs than just dealers or resellers of a make. We must, above all, be able to manage, more and better, and to preserve our own make; the make of our equity, so that we can survive this period of market uncertainties, with focus on the cash and the return on our investments. We have gone through a difficult first half of the year, with the well-known international scenario reflecting on our Country. The Euro financial crisis ¬ faced by Greece, Spain, Italy, among others European countries, has reached us. Around here, a paltry economic growth, with a drastic retraction in the industry and a worrisome household indebtedness, that ended up in this high delinquency that the Banking System is suffering, and the consequent credit restriction. All this has reduced our sales performance, which has lead the government, quickly, to adopt measures to stimulate consumption, including reduction of Excise Tax (IPI), Tax on Financial Operations (IOF), reserve requirements, bank spreads, industry margins, besides the BNDES/ FINAME taxes reduction. It is fact that the banks have improved the record approval for¬ funding, today around 55% for new automobiles. However, the segment of motorcycles continues suffering with the low credit approval, around 17%, in addition to the second-hand segment, whose approval is around 30%. Therefore, it is essential that we become conscious that this economic winter we face today will be long, and even if favorable winds blow in our market direction, we must be very efficient in managing our day-to-day, focusing more the departments of second-hand vehicles and after sales so that we can ensure profitability and sustainability of our business.

35 June - July 2012

National Federation of Automotive Vehicles Distribution Bimonthly Publication

TRUCKS

After technology change, industry prepares itself to resume in the second half of the year

INTERVIEW

MARKET

FENABRAVE RADAR

Jon Sederstrom, managing officer of J.D. Power Brazil, says that customer’s voice is essential for automotive industry development.

Market of imported items drops after taxation changes.

XXII Congress and ExpoFenabrave take place in August. Fenabrave TV promotes training courses for field reporters.

In a moment of market contraction, we cannot nor should not belittle. We have that to seek information, to learn from the experience of our colleagues and specialists in these areas. Hence the enormous importance of you participating in the Twenty Group organized by Fenabrave in partnership with NADA and Makes associations. This is the most efficient and cheap learning tool, accomplished ¬ by the exchange of experiences among peers, and it is available to you through your Make Association. Equally important is the participation of your company, through your managing team, in our XXII Fenabrave Congress and ExpoFenabrave, which will be held on August 16-18, at Expo Center North, in São Paulo, SP. Besides being a chance of having national visibility and strengthening our segment before authorities and assemblers, these events will also be a unique opportunity to watch and learn new techniques, such as those transmitted by one of our main speakers, Dr. Clautaire Rapaille who, in his book “The Cultural Code”, teaches us to understand how does the consumer think, act and make decisions, and who, in our Congress, will show us how to manage our sales teams, increasing its effectiveness when addressing customers. Consultant for companies such as Boeing, LG, Chrysler, Fiat, Itaú Bank and other Fortune 500 companies, Rapaille will be one of the remarkable presences of our Congress. We expect to see you and your collaborators in August! Register yourself and your staff, and turn knowledge into value for your business. See you then!

www.indiana.com.br

SEGURADORA OFICIAL DA COPA DO MUNDO DA FIFA 2014 ™

Dealer Magazine

SUCCESSION

sucessão

Learn how the New Leaderships Program is developed by ACAV. Bimonthly publication of Fenabrave - National Federation of Automotive Vehicles Distribution. Year 5 – Issue 35 – June/July 2012 Board Chairman of Deliberative Council and Board Flávio Antonio Meneghetti President Alarico Assumpção Jr. Vice Presidents Antonio Figueiredo Netto, Edson Luchini, Elias dos Santos Monteiro, José Alberto Gisondi, Mário Sérgio Moreira Franco, Mauricio de Souza Queiroz, Paulo de Tarso Costa Beber, and Paulo Matias “Ad-hoc” Vice Presidents Gláucio José Geara, José Carneiro de Carvalho Neto, Octávio Leite Vallejo, and Ricardo de Oliveira Lima Ex Officio (Former Presidents): Alencar Burti, Sergio Antonio Reze, and Waldemar Verdi Jr. Editorial Board Flávio Meneghetti, Alarico Assumpção Jr., Paulo Engler, Marcelo Ciardi, Valdner Papa, Rita Mazzuchini Editorial and Production MCE – Mazzuchini Comunicação e Eventos R. Frei Rolim, 59 - CEP 04151-000 – São Paulo, SP Phones: (11) 2577-6533 / 5582-0049 E-mail: rita@mcepress.com.br Editor and Journalist in Charge Rita Mazzuchini (Mtb 22128) Assistant Editor Igor Francisco (Mtb 57082)

FENABRAVE RADAR

MARKET

mercado

F&I

PRODUCTION LINE

linha de produç ão

After switching the engine technology, trucking industry prepares to resume in the second half of the year.

The importance of good relationships among Chains and Assemblers. With more than 30% of share, Dealers answer the 16th Fenabrave Market Relationship Survey and reveal how this relationship has evolved.

SUSTAINABILITY

sustentabilidade

Assemblers are committed to developing more and more sustainable products and processes.

ECONOMY

economia

Graphic Design and Art Edition Heraldo Galan and Patricia Tagnin

LEGAL SUPPORT

Photos Marcos Alves, promotion, iStockphoto

Bureaucracy and current tax rules make bus segment logistical and operational costs become more expensive.

apoio jurídico

BEHAVIOR

comportamento

INTERVIEW entrevista

LAUNCHES lanç amentos

Collaborate in this issue:

Jon Sederstrom, managing officer of J.D. Power Brasil tells a little about consultants’ work in the Country, their participation in the XXII Fenabrave Congress and shows why it is important for the automotive industry listen to customers’ needs.

Find out the latest news of the industry. Among them, Iveco introduces its new line of semi-heavyweights and Toyota Etios is disclosed in Japan.

Education is the key to reduce accidents involving motorcycles in traffic.

MOBILITY

mobilidade

Correspondence Address Av. Indianópolis, 1967 – Planalto Paulista CEP 04063-003 – São Paulo/ SP Phone: (11) 5582-0000 / Fax: (11) 5582-0001 E-mail: fenabrave@fenabrave.org.br

Adamo Bazani, CBN radio journalist, specialized in transportation, says that mobility issues will not be solved just investing in the subway.

Editorial staff contact E-mail: rita@mcepress.com.br

Clotaire Rapaille, expert in deciphering cultures and developing products and processes that fit consumers, will deliver the closing speech at the XXII Fenabrave Congress.

SALES

vendas

OPEN SPACE

espaç o aberto

Authorization for text reproductions Signed articles in this magazine are of responsibility of the author, and do not necessarily represent Fenabrave opinion. Authorized a total or partial reproduction of unsigned materials, provided the source is mentioned. Reproduction of signed articles and materials must have the author’s prior written consent.

USEBENS Vice President, Marcella Verdi Zago, comments on dealers’ potential profitability and demonstrates already obtained results.

Collaborator Daniela Figueira

Circulation 10,000 copies Free distribution

COVER STORY matéria de capa

With the Excise Tax (IPI) raise announced in Greater Brazil Plan, and the dollar raise, the imported items market has undergone several declines in sales. Companies and experts question some government actions regarding the industry. How can this situation be reversed?

With the Excise Tax (IPI) fall for cars and the Financial Operation Taxes (IOF) for financing operations make consumers go shopping in search of good business opportunities.

Commercial DNF Comunicação – Gutenberg Soledade Phones: (11) 2281-8134 and (11) 9169-7485 E-mail: dealer@dnfpropaganda.com.br

radar fenabrave

Fenabrave TV launches training course for field reporters and promotes social media debates; Highlights of XXII Fenabrave Congress; Maílson da Nóbrega delivers a lecture on macroeconomic perspectives at Fenabrave.

Stephan Keese, partner responsible for the automotive segment of Roland Berger Strategy Consultants, reinforces that dealers play a key role for the survival of makes in Brasil.

66 ERRATUM On Dealer Magazine - Page 8 of issue 34, it was mistakenly published that Fenabrave Deliberative Council and Board had met on April 11 in Londrina-PR. At the time, only Regional Administrations and Board members attended the meeting.

Sérgio Dante Zonta, Marcella Verdi, Adamo Bazani, Stephan Keese, Paulo Engler e Jeferson O. de Castro

Dealer Magazine

succession

Tomorrow leaders

Sérgio Dante Zonta

Program developed by ACAB prepares leader to run the MAN Latin America Chain in the future.

ake strengthening is achieved through hard work and strategies aiming to face current challenges in order to envision new possibilities for the future. In the case of ACAV (MAN Latin America Brazilian Dealer Association), the path travelled in the last 30 years by the organization was experienced by great qualitative leaps, and its main focus was the investment in human development. Through the continuing education of MAN Latin America professionals the Association has achieved success towards the level desired by all players in this fierce market: excellence. Conquering the company longevity, keeping it updated with a contemporary profile, is not the easiest task. Therefore, ACAV, aware of the Dealers’ needs, developed a New Leadership Program. The steps to implement the initiative had the support and partnership of Fundação Dom Cabral, one of the best business schools in the world (according to Financial Times Ranking 2012), were further consolidated in 2010, when the program had its first class. From then on a cycle was open which main goal is to prepare new leaders for the Chain. Two classes have been formed, a total of approximately 72 people. Its structure, which combines theory and practical training, provides a broad view of all aspects involved in the business of trucks and buses. Over six months, participants have the opportunity to have contact with various topics, such as business management, entrepreneurship and family governance, as well as to develop legal, financial and logistics issues-related skills.

The acquired know-how is also put into practice, as the project suggests developing proposed strategic improvements to the Chain, and encourages them to participate in Regional Administration meetings with the owners of each Dealership. Visits to the Plant in Resende (RJ), the Volkswagen Bank and to ACAB headquarters, both in the city of São Paulo, are also contemplated. Meetings are extremely important to strengthen relationships with new Plant leaderships and the whole Chain, and the opportunity to get acquainted with the own entity actions. At the end, the class receives honors at a certificate delivery ceremony, right after they fly out to visit MAN SE headquarters in Munich (Germany) followed by the plant located in Nuremberg (Germany). This year the action takes a step further to its closure: The 1st Meeting of ACAV New Leaderships. The event, which will be a golden wrap up for all adventure faced through the steps, is scheduled for the second half of 2012 and will be held in Mogi das Cruzes city (SP). This is just the beginning of a new path for the professionals and signals the closure of one and the beginning of a new cycle. The program, which has 100% of the participants’ approval, continues. Registration for 2013 has already started in June. A third class shall be formed. With a successful structure and content, organized in partnership with Fundação Dom Cabral, the program should perpetuate the Chain, regardless of the direction in the conduction of the entity. Thus, ACAV faced the challenge of anticipating market needs, supporting the process that will enable the Chain to maintain its current leadership also in the coming decades.

Sérgio Dante Zonta is the President of ACAV (MAN Latin America Brazilian Dealer Association).

Dealer Magazine

Maílson da Nóbrega, former minister of Finance.

fenabrave radar

Round Table on Social Media With the advance of the use of social media by companies, know how to work with this important tool é essential for the development of business and, particularly, for the corporate image. In order to discuss this matter, and mainly discuss the use of these recourses by companies in the automotive industry, the Fenabrave TV will have a round table on social media on July 25, from 3 PM to 5 PM, São Paulo. On that occasion, there will be gathered Fábio Manzano Sayeg, speaker on Social Media, Flávio Meneghetti, president of Fenabrave, José Carneiro Carvalho Neto, vice president of Fenabrave, and Valdner Papa, specialized consultant in automotive industry and thematic coordinator of XXII Fenabrave Congress.

Twenty Group holds regional meetings Aiming to benefit the Chain analyzing the financial and economic situation of Dealers and exchange ideas on the best practices, the Twenty Group, launched in 2011 by Fenabrave, from a partnership established between Fenabrave and NADA – National Automobile Dealers Association, has already held three meetings this year to follow-up the performance of participants of groups formed up to now. The meetings were held in Rio de Janeiro-RJ, Fortaleza-CE, and Brasília-DF. Since the beginning of the pilot project, it has already formed four groups of Dealers . The initial work took place through a partnership with Abracaf – Association representing Fiat Dealers throughout Brazil and is being expanded to other makes. Besides Fiat Network, partnerships were entered into with Abrac – Association representing Chevrolet Dealers , Abrare – Association representing Renault Dealers , and Assodeere, which represents John Deere (Tractors and agricultural machinery). In addition to meetings in other states, the Twenty Group also conducted a training course with the accountants of the dealerships participating in the Fiat Chain. “This is the second meeting we have to work with these Dealers and the results are positive. The idea is that at each meeting the weaknesses are improved”, said Diego Lobariñas Alvarez, Twenty Group Coordinator for Fenabrave.

Dealer Magazine

Agenda

Country. Keeping the acceleration through the consumption will not be enough for the desired result, he said. “Since our industry cannot cope with the increasing consumer demand the solution is to import. It is necessary to increase productivity”, he emphasizes. For him, encouraging consumption will hardly reverse the current situation, because Brazilians already have 22% of their income committed to debt.

Maílson da Nóbrega participates in a meeting at Fenabrave The Fenabrave Deliberative Council meeting, held in June, at the headquarters, had the former finance minister, Maílson da Nóbrega, delivering the closing speech; at the time he presented his vision and perspectives for the Brazilian economy to presidents and representatives of Make Associations attending the meeting. In his presentation, the Tendências Consultoria partner showed the problems faced by Europeans amid the global financial crisis. With the news of a possible end of the Euro, Maílson da Nóbrega was emphatic that if this is confirmed it will cause negative effects on the global economy. “The Euro should prevail because it is an essential part of a broader political project. Return to old currencies would be a catastrophe”, he said. According to the former minister, the so called Eurozone is the largest project of society integration, however, the economist believes that creating a single currency was a timely wrong action. “Productivity is the word for growth. Country that does not produce, does not grow”, he said. For him, in these times of financial crises, would be a mistake if Greece left the Euro. “The currency in that country would lose half of its value. This could trigger a chain of banking

Agenda

Distribution Industry is heard by the Minister Guido Mantega Preceding the Government announcement of automotive industry incentives package, Fenabrave during a meeting with the Minister of Finance, Guido Mantega, pointed out the need of a broader credit offer with better conditions for the consumer, such as a lower percentage of down payment and greater financing terms for both new and second-hand vehicles, as well as for motorcycles. On that same occasion, the entity also highlighted requests to benefit other segments, such as trucks, buses, road implements and tractors and agricultural machinery. “This was a meeting that brought to the negotiating table, besides the government, where the President of Central Bank, Alexandre Tombini, was also present, Presidents of the main private, public and the productive industries (represented by ANFAVEA) and the automotive distribution (represented by FENABRAVE)”, Flávio Meneghetti, president of Fenabrave, says.

crises throughout Europe”, predicts the consultant who says that what is at stake is the European unity and stability and, therefore, believes that the most likely scenario is the prevalence of the Euro in the region. Maílson da Nóbrega warned that this international crisis can reflect in the Brazilian productive sector. According to him, 20% of Brazil exports are destined to that region. Added to that, the U.S. economy will recover at a slower pace, with acceleration from 2013 on, and the Chinese market goes through a slowdown time. Despite the international scenario does not bring good news, the former minister had reservations as to the Brazilian economy. According to what was presented by him, the Country has a sound and well-regulated financial system, macroeconomic stability (inflation targets, public sector primary surpluses, and floating exchange rate). “Brazil has international reserves higher than the foreign debt. Now a days we are creditors”, celebrates. As the trend towards economic growth in Brazil, Maílson da Nóbrega bets on the growth of the productive capacity of the

Government announces new package In ceremony held at the Planalto Palace, on June 27, the Brazilian government announced a new package, the seventh, to stimulate the economy. The “Equipment PAC” provides for the provision of R$ 8.4 billion to streamline government procurement with preference for domestic industry products. This is one more series of measures in an attempt to prevent the fall of Gross Domestic Product (GDP) in view of the international crises. The announced program provides for acquisitions in the areas of health, defense, education and agriculture, such as backhoes, ambulances, school buses, police motorcycles, missile launcher and armored vehicles. “The goal is to meet the population needs, face problems such as the drought in the Northeast, expand productive capacity, improve roads, and increase investments in the Country. It is important to encourage investments, which are the mainspring of economy”, said Minister Guido Mantega, without mention that the measures will help to overcome the consequences of international economy difficulties. Marcelo Ciardi Franciulli , the sectoral officer of Fenabrave, represented the president Flávio Meneghetti at the package launching ceremony.

During the speech, Maílson da Nóbrega warned about the need of reforming the taxation system. Thus, the likelihood of increasing the growth rate through the productivity increases. “Long action changes generate productivity. Long periods without reform generate deceleration. This is the case today in Brazil”. At the end, the former minister presented his projections for the Brazilian economy in 2012. For him, Selic Rate should end the year at 7.5%, the inflation, as measured by the Amplified Consumer Price Index (IPCA), at 5.1%, and the GDP, which impacts directly the automotive industry, shall not exceed 1.9%. “The question is no longer regarding the Country setback, but whether it will grow”, concluded Maílson da Nóbrega stating that the auto retail should outgrow the economy.

Caixa Econômica Federal and Panamericano Last May, in São Paulo, Elias dos Santos Monteiro, vice president of Fenabrave, and Paulo Engler, chief officer of Fenabrave, attended the event sponsored by Caixa Econômica Federal and Banco Panamericano, to announce better financing conditions for new cars. The “Better with a Brand New Car” promotion offers attractive conditions for those who want to buy a brand new car. The difference is a significant reduction in interest rates usually practiced in the market and a down payment Elias dos Santos Monteiro and Paulo Engler. amount lower than usual. The event was attended by leaders of both banks, as well as representatives of dealer partners. The action is part of the Caixa Best Credit Program and contemplates more than 800 dealerships across the Country. Elias Monteiro, vice president of National Federation of Automotive Vehicles Distribution (Fenabrave), commented that this initiative can be successful. “CAIXA and Panamericano partnership is very important to indicate new ways of financing vehicles to other financial institutions”, he said. Dealer Magazine

fenabrave radar

Fenabrave TV

New training course for field reporters

Valdener Papa, Paulo Engler, Rita Mazzuchini, and Elias Monteiro in lectures at the meeting.

Recife hosts meeting of Board and Regional Executive Board On May 25 and 26, the city of Recife hosted the Fenabrave statutory meeting with its Board and Regional Administrations. On the first day of works, the participants gathered to discuss automotive industry-related issues. On that occasion, Flávio Meneghetti, president of Fenabrave, opened the meeting and stated that these meetings are also to strengthen the relationship among all, therefore, the meetings will be held on weekends with programs welcoming the wives’ participation. Meneghetti defended the importance of Dealers ’ unity for the maintenance of business and industry growth. “We are not here as dealers, but as the industry business people. We must keep the reins of our businesses in our hands”, he said. Another matter addressed at the meeting was the direct sales issue faced by the Chain. “It is important to maintain a good dialogue with Anfavea and directly with manufacturers. We have visited these companies and felt a good receptivity to discussions and agreements”, said Meneghetti. During the meeting it was announced that Fenabrave was invited to occupy two seats in the Denatran working committees: Urban Transit and Mobility Legislation “We are honored to be invited”, said the president. Also present at the Board Meeting, Alarico Assumpção Jr., President of Fenabrave spoke about motorcycles, trucks and tractors industries, government measures for these segments, the importance of reducing IOF to finance motorcycles, as well as what has already been achieved with the Procaminhoneiro and PSI BNDES program, in addition to sales issues after the inclusion of Euro 5 technology trucks in the market. “The supply of S50 diesel is already being 10

Dealer Magazine

settled and this will greatly assist the consumer, who will not need to travel far to fill up their trucks”, explained the executive. Assumpção Jr., who also said that Fenabrave projects a reheating of the truck market for the second half of the year, due to the new conditions proposed for the FINAME, and the prospects for economic growth and good results in agriculture. “It should have an improvement in the shipping price for the new crop to be harvested. The industry should recover and sell the high inventory found in the Chain today”, he said. In addition to the discussions regarding the sector performance, at the meeting were also presented topics of common interest to the Board. Rita Mazzuchini, Fenabrave communication advisor, presented the entity integrated communication plan to the attendees, detailing the objectives, goals and actions of Fenabrave in this department.

Since last June 20, FENABRAVE TV is teaching the Training Course for Field Reporters, scheduled to end on July 25. Named “Professional Certification Prep Program - Vehicle Loan Module”, the course aims to benefit all car dealerships of the country by offering to enrolled employees all preparation and training for obtaining the certificate required by the Central Bank of Brasil. According to the Central Bank resolution No. 3.954/11, which amended and consolidated the rules that regulate the activity of approximately 160,000 field reporters operating in Brazil, the professionals working for the field reporters shall have, up to 2014, a professional certification to act in dealerships. O obtain the certification, the professional shall master concepts of credit, vehicle financing, SFN knowledge, among others. “Thinking of preparing professionals from all dealerships in the country for obtaining such Certificate, FENABRAVE TV launches this course through the Instituto de Educação FEBRABAN (Education Institute), which was contracted to develop a specific program for car dealers in order to prepare and train professionals working as field reporters in vehicle sales”, says Flávio Meneghetti, president of Fenabrave. Still according to the president of Fenabrave, the course intends to train at least two professionals per dealership, since each company must have at least one certified. If we consider

the possibility of having one professional absent from the company due to vacation or illness leave, or even leaving the company, I imagine each dealership shall prepare and certify at least two professionals”, recommends Meneghetti. For the students’ convenience, the course was entire remotely taught with 12 hours of lessons broadcast live on FENABRAVE TV, once a week (Thursdays), from 6 PM to 20 PM. Coordinated and taught by Professor Francisco Ávila Filho, the “Professional Certification Prep Program - Vehicle Loan Module” consists of three modules: “Module I” - legislation and credit; “Module II” - customer service, relationships, ethics and representativeness, and “Module III” vehicle financing. Each module shall be concluded in two weeks. Lessons will be televised by FENABRAVE TV and activities will be held on the Instituto de Educação FEBRABAN portal. After attending all classes, the student will be able to perform a dummy test. Besides the content, the Instituto is responsible for the faculty and didactic materials to be used in classes as well as textbooks, video lessons, among others. “It is noteworthy that the Instituto de Educação FEBRABAN does not offer the Central Bank required certification. However, the Prep Program provides the student with the necessary content so they can take the exam of certification required by the Central Bank. This is fundamental”, concludes the president of Fenabrave.

XXXIV Conac happens in Uruguay

Fenabrave holds meeting on Motorcycle segment

On May 7-9, Alarico Assumpção Jr., President of Fenabrave, represented the entity in the XXXIV Conac and XIX Expo Conac. The events were held in Punta Del Este, Uruguay, and gathered several consortia system executives. Organized by the Brazilian Association of Administrators Consortium (ABAC), the events consisted of lectures that addressed key matters such as the executive professional development, new techniques to leverage sales and the teamwork

XXII Fenabrave Congress – Valdner Papa, the Congress thematic coordinator, made a presentation to ask for the support of officers and presidents of Make Associations regarding the Chain participation in the XXII Fenabrave Congress to be held on August 16-18 in São Paulo. “The goal is to reach 2.6 thousand delegates at the event this year”. On the occasion, Papa spoke about the thematic programming, which was based on the equality of automotive segments and also in the operational area of the dealerships.

Autopar 2012

The president of Fenabrave took the opportunity to ask the mobilization of Dealers to participate in the event. “If each Regional takes 50 people, we would be 1,100 people participating, which would be very important to the event”, concluded Meneghetti, who had the proposal approved by the Regional Administrations attendees.

In June, Alarico Assumpção Jr., President of Fenabrave, represented the entity in Miami, U.S., at the award ceremony of “Latin American Sales Personality Award”, awarded by FENADVB – National Federation of Sales Associations to Roberto Cortes, entrepreneur, President and CEO of MAN Latin America Volkswagen Caminhões.

Gláucio Geara, vice president of Fenabrave, represented the president of Fenabrave at the opening of Autopar 2012 - 6th Automotive Suppliers Trade Fair, held on June 13, in São José dos Pinhais, metropolitan region of Curitiba-PR.

Last June 13, Fenabrave headquarters in São Paulo hosted the main leaders of two wheels industry in Brazil. The agenda of discussions contemplated the difficulties the industry faces for the granting credit approval record. Present at the meeting were Alarico Assumpção Jr., President of Fenabrave, Antonio Figueiredo Netto, vice president of Fenabrave and responsible for the segment negotiations, Paulo Engler, chief officer of Fenabrave, and Marcelo Ciardi Franciulli, sectoral officer of Fenabrave. Abraciclo and segment-related Make Association presidents also participated.

Latin American Sales Personality Award’

Dealer Magazine

fenabrave radar

Programming Highlights

Check some highlights of the thematic grid for XXII Fenabrave Congress XXII Fenabrave Congress

Associations encourage Chains to attend the event In a clear demonstration that the economic category union should be reflected on the Dealers’ participation at XXII Fenabrave Congress, Make Associations are getting mobilized to encourage their members to attend the event. As part of actions Assobrav - Brazilian Association of Volkswagen Distributors, Disal Group (organization commercial arm) joined as one of the Gold sponsors of ExpoFenabrave. Furthermore, to stimulate your chain to attend the XXII Fenabrave Congress, the entity will refund their members’registrations fees (one holder per dealership/DN), defray the enrollment fees of their leaderships (45 pax) and will hold a make meeting during the event, in the morning of August 18, closing date of the Congress. However, in order to be benefited with the refund, each holder should go to the event site ( www.congresso-

fenabrave.com.br ), sign up and mandatorily attend the meeting scheduled by Assobrav. On the other hand, Abrare – Brazilian Association of Renault Dealers will pay for the registration of 73 groups of Dealers that form the make Chain. With the registration paid by the entity, Dealers just have to register themselves on the event site to ensure their participations. ABCN – Brazilian Association of Nissan Dealers will do the same for its members. ABRAVO ( Volvo) and ABRACASE (Case New Holland) will offer one registration per headquarter in their chains. ABRADIT (Toyota), will pay for its Executive Board members’ registrations. UNIMASSEY will pay one registration per headquarter and also for its Executive Board members, and AUTOHONDA will pay one registration per Dealer.

Registrations as from July 16 (R$) Individual

Inscrição coletiva 1st

2nd

3rd

3 days (Congress + Expo + 2 lunches)

1.270,00

1.170,00

170,00

3 days (Congress + Expo)

1.100,00

1.000,00

Free*

Group registrations with the same CNPJ

BNDES confirms participation in the event BNDES - National Bank for Economic and Social Development has already assured a stand to participate in the ExpoFenabrave trade fair that takes place simultaneously with the XXII Fenabrave Congress. The bank participation will be institutional and technicians should be at the booked space to service the Dealers explaining all credit modalities offered to the tractors, agricultural machinery and trucking industries.

Special Conditions From the fourth registration up you can register for one (1) day of congress for R$ 550 (no lunch) or R$ 635 (lunch included).

Payment Registration payments may be through collection bill or credit card (MasterCard or Visa). Registration and payment guidelines may be found in the event site (www.congresso-fenabrave.com.br).

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Service to Attendees For registration or information, booking of accommodation and tickets: (11) 5582-0091 (Ana Estela and Paulo).

General The impact of variable margins in the Dealers’ results. With this theme the speech to be delivered by Luca Montagner, advisor and senior researcher of ICDP and Quintégia, promises a full room during the International Round Table scheduled for the morning of August 16. The specialist works in Italy since 1999 for ICDP (International Car Distribution Program), the most important research nonprofit organization of Europe in distribution of automobiles (www.icdp.net). Since 2004, it also operates in Quintégia (www.quintegia.it), which activities are focused on observation and interaction with dealerships. Its main research focus on post-sales, second-hand cars, analysis of the largest dealer groups, trends of franchising chains and structure of standards and margins in all major car manufacturers operating in Europe. Already a tradition in the Congresses organized by Fenabrave, the International Round Table aims to convey to attendees an overview of what happens in the global automotive market, providing key information so they can envisage new paths and trends. This year the event brings an innovation since it will not discuss numbers only. Each country present at the event will deliver their numbers, which will be part of a DVD to be delivered to each Make Association to insert in their sites, and will focus round table discussions on two topics extremely important for Dealers: A) High investments required by the industries to upgrade and modernize Dealerships facilities. How does each country see this trend and what is their positioning? B) The increasing importance of Internet in the automotive segment. How does each country see this trend and what results are being achieved? Participants will include leaderships from all over Latin America, United States and European countries. Autos and light vehicles Kakinof will speak about industry and chain relationship. Censorship free! Executive Paulo Sérgio Kakinof left the command of Audi in July to assume as CEO of GOL, Airline Company of which he had already been a member of the Board since 2010. Despite the change of companies, he confirmed his participation in the lecture “The

future relationship Industry and Chain, censorship free”, to be delivered to car and light commercial Dealers during the XXII Fenabrave Congress in the morning of August 17. Kakinof was the youngest president in the history of Audi in the world. He took office in 2009, at 34 years. The executive started his career in the automotive sector at 18 years of age as a trainee at Volkswagen do Brasil. At the assembler he was responsible for the areas of technical assistance and dealership Chain until becomes the national sales manager, where he remained until 2002. The following year, Kakinof was promoted to sales and marketing officer for Volkswagen. In 2007 he was invited by Volkswagen AG to take over the company business in South America, as the Head of Group Sales Development, position held until October of that year. Before returning to Brazil, the young Kakinof was promoted to CEO of Volkswagen South America. Although young, his experience in the industry and well known impetuosity will make his lecture to be an event not to be missed. Don’t miss it! Motorcycles What to expect from the sales volume and motorcycles market share. This theme should interest the two wheel Dealers, and will be addressed by the consultant Francisco Trivelatto, consultant who has been working for 20 years in the distribution industry. Economist – graduated from the School of Economics of USP – São Paulo University. Since 1979 he operates as economic adviser in Make Associations and, as of 1987 as a consultant in strategic planning and marketing of national and imported vehicles, for car, trucks, motorcycles and agricultural machinery.

Luca Montagner, Paulo Sérgio Kakinoff, Francisco Trivelatto and Francesco Pallaro.

Tractors and Agricultural Machinery. How to plan our dealerships. With a degree in Agricultural Mechanical Engineering at the Agrarian Technical Institute of Torino (Italy), Francesco Pallaro, speaker at the XXII Fenabrave Congress, began his career at Fiat Group, in 1966. In Latin America, he was vice president of New Holland Agriculture and of Case IH Agriculture. He is currently a Board member of Case New Holland. He is also director of AECIC (Companies Association of the Industrial City of Curitiba) and of Chamber of Commerce Italy-Brasil in Paraná.

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fenabrave radar

The art of communicating well

Junte - se à melhor.

Marco Eleuterio

Somos uma das maiores empresas de Financiamentos e Seguros (F&I) nos Estados Unidos, onde temos parceria com mais de 3.000 revendedoras e mais de 7.5 milhões de contratos em vigor.

Last month, when the federal government announced the IPI reduction, Abradif and Assobrav used Fenabrave TV to talk about the subject to their Chains. The transmission was live with interactivity via e-mail, telephone and SMS.

took a moment to reflect on the theme I would address in this article. I researched some issue and came across the interview of Andréa Schoch, Dtcom Content Manager that caught my attention. The central theme was communication e how to develop it positively within institutions and among their employees. Despite of being a burning issue, communication still is a challenge for corporations. After all, it is an extremely important and decisive skill that is already part of groups and people. Analyzing the content of the interview and some classes taught by Dtcom course program I realized that it would be valid to reflect on this theme. Communication is key for peoples’ relationships and allows mutual transformation as well as of the own environment where it happens. Opposed to what is appears to be, it happens not only with speaking, but through other language forms as well. You’ve probably heard the expression “Body language”, right? I believe that many other elements also speak. But, what’s the difference between talking and informing? Many organizations believe they are communicating when announcing information to their employees. I don’t agree with this view and searched for some theoretical arguments to explain the difference among them. I’ve researched some definitions of communication and one of them, from the theorists Boaventura and José Marques de Melo, caught my attention. They define communication as a process that influences the speaking and writing to the point of enabling the human behavior. On the other hand, information expresses the viewpoint of all, since their parts express a full message and represent a “freedom of choice” of a user before a process of receiving a message. It is clear that an exchange of information is not a communication process. Communication includes a set

of items responsible for ensuring a full message to the receiver. Therefore, it is worth highlighting the importance of projects in the communication area, such as the Fenabrave TV. Every time Dtcom implements the training centers at the Associations and dealerships it also introduces a communication vehicle among associates and their Chains. It provides a dialogue channel through which the audience have access to gestures, tone of voice, posture, environment used, among other items that complement all communication. Through the TV, Associations and dealerships can produce events, lectures and workshops alive or recorded, which are broadcast simultaneously to all audiences, correctly planned and uniformly. An example of a positive use of Fenabrave TV as a communication channel happened last month, when the federal government announced the IPI reduction. Abradif and Assobrav Make Associations use the communication channel to talk to their dealerships about the subject. The transmission was live with interactivity via e-mail, telephone and SMS. To get an idea of the range, only these two events reached 350 Ford Chain dealerships and 260 Volkswagen dealerships. Furthermore, the programs were repeated in all dealerships that could not watch it live. This example illustrates perfectly the importance of communication and information. The range allowed interactivity in the dealerships, both sides were present: The sender and the receiver of the message. The tool enables complete communication and expands the possibilities of making big names in communication. Fenabrave TV was conceived from a training tool and now a day is also seen as a channel of communication. Does your communication or marketing area know that?

Marco Eleuterio, master in Industrial Computing, PhD in Computer Science from the Université de Technologie de Compiègne UTC/France and CEO of Dtcom.

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Agora presente no Brasil. Visite - nos na E xpo - Fenabrave 2012 16 -18 de agosto - Stand G10 Pavilhão A zul/E xpo Center Nor te São Paulo - SP

Lucros são sempre incer tos e dependem do sucesso do negócio. Aumente a lucratividade da sua empresa com os ser viços prestados pela JM& A Brasil no treinamento de sua equipe de vendas.

cover story

Trucking indusTry is opTimisTic for The second hAlf of The yeAr After the shopping race at the end of 2011, the trucking industry adapts itself to new technologies and prepares itself to resume in the second half of the year.

ccording to a survey conducted by Fenabrave, 2011 was a positive year for the trucking industry, which ended the period with growth. Last year 172,661 units were licensed, a growth of 16.23% compared to 2010 (157,409). But the market went through some changes as from the end of 2011. The main one was the change of technology used in the engines of these vehicles, which passed from Euro 3 to Euro 5. With the introduction of Euro 5 in the market, Assemblers and Chains expanded their Euro3 trucks inventories, due to the market anticipation that wanted to take this opportunity to renew the fleet with prices ranging from 8% to 15% lower. “In the last six months of 2011, the truck market, in the accumulated of the year, was growing at an average of 14% per month”, explains the President of Fenabrave, Alarico Assumpção Jr. According to him, with the end of Euro 3 vehicles inventories, and the new technology equipped trucks being sold at prices up to 15% higher than their predecessors, the market experienced a moment of decline in sales. “There was a peak of sales in March, period in which the production of vehicles with Euro 3 technology was discontinued. However, we’ve noticed successive falls in the evolution from month by month”, adds Assumpção Jr.

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MAM Latin America Assembly line.

“At Fenabrave, we believe that as of July there will be no more inventory of Euro 3 trucks for sale. From there on the great demand will be for Euro 5 vehicles and this will be very good for the market. There are several points to be addressed when speaking of the truck market; the first is the S50 diesel issue. The distribution of this type of diesel improved a lot compared to the beginning of the year, due to the reduction of distance to be acquired. Currently, it is easier to have access to this type of diesel, both on highways and in the cities. The driver who needs to filling up won’t need to go far to find a service station with S50, and it also helps the market a lot”, explained the President of Fenabrave. Incentive measures – Together with the announcement made by the government, in May, on the reduction of IPI for automobiles and the IOF in the financing operations, the National Bank for Economic and Social Development (BNDES), 18

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in response to request made Fenabrave, modified the financing conditions for trucks, machines and equipment. PSI BNDES Program had a significant reduction in interest rates for the purchase of buses and trucks, rising to 7.7% from previous 5.5% per year. In addition, the Procaminhoneiro program, which finances vehicles for independent truck drivers, had its term extended up to 120 months, from previous 96 months, also with a rate of 5.5% per year. “Today the market is experiencing a slow moment in sales of trucks, so there is a great challenge to be faced in the second half of the year. With the changes in the financing rules of these vehicles, the industry business people were more optimistic, since the interest rates fall and the term increase basically turn the new trucks prices equivalent to the Euro 3 which were produced until last December”, evaluates the President of Fenabrave. “After the PSI new measures implementation, sales increased. First we launched a credit line with

final cost of 7.7% for trucks and buses acquisitions and, recently, government reduced rates in 5.5% until August 31. Despite the short time with the new measures, we have noted positive differences”, said Claudio Bernardo, Chief Officer of Indirect Operations Area of BNDES. Bernardo explained that after the new interest rates implementation the record approvals increased. “After the measures were announced, we noticed a larger purchasing movement and this also helped the records approvals. Those who had bought at 7.7% rate received the record cancellation and repurchased at 5.5% rate. This represented a significant daily increase, and in less than a month, we have seen positive results”, said the executive of BNDES. Claudio Bernardo’s forecasts have not yet been confirmed. According to Fenabrave, the trucking industry sold 14.7 thousand units in the first half of the year, which represents a drop of 16% compared to what was licensed in the same period of 2011. According to Fenabrave forecasts, trucks licensing may reach 160,702 units this year, a 6.93% drop. “We expect good results in the agriculture, the retaking of civil construction, among other industries. In addition, we may list the infrastructure investments that should be made by the government due to the proximity of the World Cup

and the Summer Olympic Games, not to mention the fleet replacement and greater release of funds by BNDES”, says President Flávio Meneghetti. Marcello Ciardi Franciulli, Sectoral Officer of Fenabrave, also believes that new measures may boost this market. “The trend from now on is that sales start to recover and we should have a better second half of the year due to the harvest, the BNDES program and the favorable conditions for truck sales”, concluded. Strategy – Rodobens Caminhões e Ônibus, with 31 dealerships of Mercedes-Benz make in Brasil, recorded an increase of 13.7% in truck sales in the

Alarico Assumpção Jr., President of Fenabrave, Claudio Bernardo, Chief Officer of Indirect Operations Area of BNDES and Ademir Odoricio, Managing Officer of Rodobens Caminhões e Ônibus.

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INTERVIEW

Jon Sederstrom

Rodobens Caminhões: Representative of Mercedes-Benz expanded Euro 3 inventory, which represented 12.3% in the net revenue of the company.

THE CUSTOMER’S VOICE first quarter of 2012, compared to the same period last year. This result went in the opposite direction of the market, thanks to a strategy adopted by their leaders. “We’ve prepared a large inventory of Euro 3 technology vehicles. It accounted for 12.3% of the net revenue in the first quarter of this year in the company. And this helped to keep us calm”, said Ademir Odoricio, managing director of Rodobens Caminhões e Ônibus. According to the company, its privileged position with dealers located in markets of strong growth, such as in the North, Northeast and Central-West regions, contributed to the strategy success. In the last five months of this year, the Rodobens Caminhões e Ônibus Chain, representing 16% of Mercedes-Benz total sales, sold 2,360 units, ensuring the second make position in Fenabrave ranking, with 25.93% of share between January and May this year. New Package – In an attempt to leverage the economy growth, on July 27 the government announced the Equipment Growth Acceleration Program (PAC). The purpose is to provide R$ 8.4 billion to streamline government procurement with preference for products of domestic industry. This is one more series of measures to try to prevent the fall of Gross Domestic Product (GDP), sum of all goods and services produced in the country, in view of the international crises. The announced program provides for acquisitions in the areas of health, defense, education and

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agriculture, such as backhoes, ambulances, school buses, police motorcycles, missile launcher and armored vehicles. The 2012 PAC will increase to R$ 51 billion from R$ 42.6 billion, an increase of R$ 8.4 billion. “The 2012 PAC exceeds the R$ 50 billion. It is the largest PAC we’ve ever done”, said the Finance minister Guido Mantega when announced the package. “The goal is to meet the needs of the population, face problems such as the drought in the Northeast, expand productive capacity, improve roads, and increase investments in the Country. It is important to encourage investments, which is the mainspring of economy”, said Minister Guido Mantega, without mention that the measures will help to overcome the consequences of international economy difficulties. In addition to stimulating the economy, the program will act to combat problems such as drought and benefit schools through the purchase of buses and furniture. In general, in the educational area, 8.5 thousand vehicles and 30 thousand pieces of furniture will be purchased. In order to combat the drought, 8 thousand trucks and 3 thousand agricultural patrols (set consisting of tractors and implements to increase the agricultural productivity) will be purchased. In terms of vehicles, it is also included 2.1 thousand ambulances for the SUS (Brazilian Unified Health System) and 160 train cars as well as 500 motorcycles for the Federal Police and Federal Highway Patrol.

With the increasing market competition, listening to the customer is critical to business development, particularly in the automotive industry. Listen, measure and draw up strategies are processes that can make a diﬀerence in the route a company will take in the market. This is the work J.D.Power performs in several countries and now brings his market intelligence solutions through research and consulting.

With 45 years of acting in the market, J.D.Power opened a branch office in Brazil and is already conducting market researches for large companies of the industry. In 2012, the second edition of the Vehicle Owner Satisfaction Study (VOSS) will be finalized and the results will be presented, first-hand, during the XXII Fenabrave Congress, to be held on August 16-18 at the Expo Center Norte, São Paulo. “Dealerships may use J.D.Power researches data in various ways, depending on the data. For instance, they can use VOSS (or CSI and SSI data) to analyze what their customers are saying about their experiences at the dealerships”, says the managing officer of Power Brasil, Jon Sederstrom. “This is an exciting period for the Brazilian automotive industry. Competition is fiercer than ever. And, despite a slowdown period in 2012, J.D.Power and LMC Automotive Ltd. expect sales growth recovering in 2013, reaching a volume of 5 million until 2016. J.D.Power is excited to support our customers and help them to enjoy this period of evolution of the industry”, added the officer. Before arriving in Brazil in 2010, and take command of the branch office located in São Paulo, Sederstrom worked as Business Development and Strategic Planning Officer of J.D.Power. Based in Los Angeles, he exerted efforts to develop corporate strategies, managed activities of acquisitions and partnerships, and concluded a variety of financial and operational research to support business, such as entering in new markets, portfolio management, etc. Check below the exclusive interview Jon Sederstrom gave to Dealer Magazine. Revista Dealer

INTERVIEW

Dealer Magazine – It is the ﬁrst time J.D.Power will introduce itself to Brazilian Dealers. What is the work developed by the Consulting company around the world and what do you intend to bring to Brazil? Jon Sederstrom – J.D. Power and Associates is a global marketing and information services company, specialized in researches and consulting of customer satisfaction in a variety of companies and industries. Established in 1968, J.D.Power listens to consumers and analyzes their opinions and insights to offer some of the most advanced solutions available in terms of product quality and customer satisfaction. The company global measurements as to quality and customer satisfaction are based on millions of consumers’ answers every year. The automotive industry reference studies include Vehicle Owner Satisfaction Study, Initial Quality Study, and Customer Satisfaction Rate. J.D.Power consulting services turn research information into actions in areas of quality of plants and design of vehicles, as well as in improvement of sales performance and services of dealership Chains. J.D.Power opened its São Paulo office in 2010 and provides a wide range of automotive solutions for its customers, including Brazilian assemblers and dealerships. This includes reference studies, customer satisfaction monitoring, own researches, vehicle quality consulting and performance improvement of Leadership Chain.

There is a large volume of written information on prices of vehicles in Brazil compared with other countries. As a rule, the cars in Brazil cost twice as much than in the United States.

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Dealer Magazine – J.D.Power market researches are conducted through interviews? What is the public? Jon Sederstrom – J.D.Power reference studies are based exclusively on opinions and experiences of actual customers. The Brazilian Vehicle Owner Satisfaction Study to be published in August 2012, for instance, is based on approximately 8,000 on-line interviews with consumers. In other studies J.D.Power conducts interviews by mail, by phone or in person. In each case the research is designed to provide the best possible information, given the cultural and logistical restrictions. Our corporate preference, however, is to conduct on-line researches whenever is possible. We conduct tests in Brazil and abroad. In each case, we noticed that consumers provide more complete and thoughtful answers when they can fill out a research in a convenient time. On-line environment provides this flexibility. Dealer Magazine – Has J.D.Power conducted any research on the Brazilian market? What are the results obtained? Jon Sederstrom – In Brazil, J.D.Power publishes its Vehicle Owner Satisfaction Study. It is an annual survey that includes vehicles, Leaderships and ownership cost experiences after 1-3 years. J.D.Power Brazil also conducts its own studies of satisfaction (monitoring) and dissatisfaction (factors that prevent and reject sales). The company also performs its complete portfolio of consulting and performance improvement works in Brazil. Dealer Magazine – What is the work you develop with the Dealers? Jon Sederstrom – J.D. Power and Associates conducts reference researches and researches for the Dealers themselves. We also carry out consulting project regarding the researches insights and to help improve the Chains performance.

The Vehicle Owner Satisfaction Study in Brazil is an example of reference research that may be used by the Dealers. It has elements that focus on the customers’ experience with a dealership during the service process. We also conduct Vehicle Owner Satisfaction Studies in other markets. In the United States, Japan and China we conduct a Sales Satisfaction Rate Study, exclusively focused on the commercialization process, and a Customer Service Rate Study, when we ask customers about their experiences at the dealership service department as to maintenance and repairs (both during and after the warranty period). In Brazil and abroad we carry out research project suitable for individual clients to answer key questions, such as: • What is the trend of my performance in terms of sales satisfaction over time? • What is the trend of my performance in terms of service satisfaction over time? • Why consumers are avoiding my make? • Why consumers are rejecting my dealership? • Why consumers are deserting my dealership for services? In our consulting projects, J.D.Powers uses its existing research data to identify the most important aspects of sales and service experiences. We, then, defined the Dealerships patterns, create processes more effective and carry out trainings. Dealer Magazine – How does the Dealer Chain can use the data provided by you? Jon Sederstrom – Dealerships may use J.D.Power researches data in various ways. For instance, they can use VOSS (or CSI and SSI data) to analyze what their customers are saying about their experiences at the dealerships. They also can see other dealerships information, so they can know what is working and what is not working in their stores, as well as in their competitors. Finally, as I mentioned before, Dealerships may use J.D.Power re-

Given the traditional barriers to enter the Brazilian market, the companies operating here did not suffer as much pressure to captivate their customers, to win their business and maintain their loyalty and support.

searches data to define their patterns and create more efficient processes. In 1993, J.D.Power Brazil developed the Power Information Network® (PIN) to provide point of sale transaction data to Dealers. Today, the PIN is providing automotive solutions and services to more than 7,500 dealerships around the United States and Canada, including 36 markets in the U.S. territory. The unique PIN monitoring electronic system collects points of sale data of new and second-hand light vehicles of F&I systems of dealerships. These transaction-level data are very similar to information collected through the bar code system of a supermarket, a technology that revolutionized the industry of consumer packaged goods. The PIN is done in cooperation with the Chain, which allow us to access their data base. Through the PIN we can collect actual data, unfiltered, on each dealership transaction. We can obtain more than 250 points of data in each transaction, from the actual price paid, vehicle prices or incentives, information about the vehicle itself, on the vehicle replaced (if applicable) and some information on the buyer/ leaseholder (except any private data, such as customer identification). In consideration for the authorization for us to access this information, Dealers have access to the PIN data base in their local market. Through PIN data (in the United States and Canada), the Dealers have access, in real time, to actual transactions of new and second-hand vehicles in their markets. This gives them the

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INTERVIEW

ability to better manage their inventories, prices and incentives for new and second-hand vehicles. They can see for how long the vehicles remain in the Dealers inventories, which options or levels of optional consumers are buying, what colors are best-selling etc. Dealer Magazine – In your opinion, Brazilian market needs to listen more to the consumers’ needs? Jon Sederstrom – J.D. Power studies in various industries showed that Brazilians usually are less satisfied with products and services than consumers in other countries. There are many factors that contribute to the relative satisfaction of Brazilian consumers. They include cultural differences and the J.D.Power research methodologies. However, it would be naive to suggest that the Brazilian companies are less focused on the Customer’s Voice than their counterparts in other countries, such as United States or Germany. Given the traditional barriers to enter the Brazilian market, the companies operating here did not suffer as much pressure to captivate their customers, to win their business and maintain their loyalty and support. As more assemblers invest in Brazil, through expanded dealership Chains and plants, the more important is for the companies listen to their customers and provide the right products and services, in the right way and at competitive prices. This is essential for long-term success of any make or vehicles in Brazil. This

The long-term success of Assemblers and Dealers in Brazil will depend on their ability to captivate their customers. This will result in domestic market share and should also increase the chance of successful exports.

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is also true for other industries, such as banks and telecommunications. Dealer Magazine – Today, Brazil has emerged as a major world markets in the automotive industry, but some experts say the products marketed here need more quality and lower prices. Do you agree with this statement? Jon Sederstrom – There is a large volume of written information on prices of vehicles in Brazil compared with other countries. As a rule, the cars in Brazil cost twice as much than in the United States. The quality issue, however, does not receive much attention. And the J.D.Power Vehicle Owner Satisfaction Study (VOSS) in Brazil suggests that there is an opportunity to improve the quality of vehicles made in Brazil. In 2011, the number of problems reported on VOSS Brazil per 100 vehicles was 306. That was the second highest score of problems among the seven markets where J.D.Power conducted VOSS last year (Brazil, Canada, France, Germany, Italy, Mexico and United Kingdom). Only in Italy it was higher, 337. As I stated earlier, the long-term success of Assemblers and Dealers in Brazil will depend on their ability to captivate their customers. This will result in domestic market share and should also increase the chance of successful exports. Provide a high quality vehicle at a competitive price will be critical to these efforts.

already have a car! Maybe your friends have a car! Anyway, the novelty of a brand new car is not as great as once was. Now consumers want value. They want the best car at the best price. The competition of automotive makes of Europe, Japan, Korea and China will accelerate this transformation. And, while the industry participants cannot control government policies regarding taxes, infrastructure, manpower etc. they can invest to provide a superior experience to the customer. Dealer Magazine – In your opinion, what is the customer role in the development of new products? Jon Sederstrom – The consumer role in the development of new products is fundamental. The Customer’s Voice collection and actions based on consumer perceptions should begin well before the launching of a new vehicle. Consumer’s opinions are essential in the successful development of new products. In fact, J.D.Power global consulting team on quality of products is dedicated to help assembler to incorporate the Customer’s Voice in launches of new vehicles. Its work includes the product design, product performance, production quality and development of Dealers (sales patterns, vehicle delivery process etc.).

Dealer Magazine – Based on J.D.Power experience in the automotive industry, what changes would you consider to be necessary for the Brazilian market? Jon Sederstrom – We believe that the Brazilian automotive market has begun a revolution in terms of customer satisfaction, which the North American and European markets have already experienced.

Dealer Magazine – What do you intend to present at the XXII Fenabrave Congress? Jon Sederstrom – J.D. Power and Associates will hold two sessions at the XXII Fenabrave Congress. First, Finbarr O’Neill, global president of J.D. Power and Associates, will discuss the company history, the satisfaction revolution of the North-American customer, and his expectations for the Brazilian automotive industry. Second, I will present VOSS 2012 findings and discuss their meanings with a panel of industry experts.

More and more, Brazilian consumers do not have desire to only own a car. Perhaps they

Dealer Magazine – How is the partnership you have with NADA?

Power Information Network service helps Dealers to manage risks, make inventory informationbased decisions and, ultimately, sell more vehicles. PIN market advanced intelligence solutions address industry needs and assist, among other things, vehicle and F&I pricing, vehicle evaluations, local and competition market reference, marketing strategies and new and second-hand vehicles inventories.

Jon Sederstrom – J.D. Power has a profound and important partnership with NADA in the United States, with two main elements. First, J.D.Power associates with NADA each year to organize its J.D.Power International Round Table, a one-day event showing J.D.Power researches findings and industry leaders’ presentations. J.D.Power round table immediately precedes the NADA annual Dealers’ conference and includes the participation of Fenabrave president and major Dealers. Recently, J.D.Power and NADA announces a strategic alliance to help dealers leverage their own business data and receive improved market intelligence through J.D.Power Power Information Network (PIN).The PIN provides timely point of sale transaction data for both Dealers of new and second-hand vehicles. PIN service helps Dealers to manage risks, make inventory information-based decisions and, ultimately, sell more vehicles. PIN market advanced intelligence solutions address industry needs and assist, among other things, in vehicle evaluations, local and competition market reference, marketing strategies and new and second-hand vehicles inventories. Although PIN does not exist in Brazil, the company is currently conducting a pilot to test its feasibility in this market. We expect to launch PIN Brazil in 2013. Dealers’ Groups interested in participating in the pilot for free should contact me at jon.sederstrom@jdpa.com.

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CMY

market

After the new automotive regime measures, import market dropped. In this scenario, still cloudy, it ranges from moderate analysis to voracious criticism.

he new automotive regime (from 2013-2017), announced in early April by the federal government, set new rules for assemblers already established or that intends to establish in the Country. By regulation manufacturers will be required to raise the level of local components in their vehicles, meet basic production steps and invest more in manufacturing engineering, research and development of innovations in the Brazilian market if they want to be entitled to an extra 30 percentage points of Excise Tax (IPI). Surtax was introduced in late 2011 for vehicles imported from out of Mexico or from Mercosur countries.

IMPORTED ON SCALES

While establishing parameters for the sector, the new regime still divides opinions regarding its effectiveness. For Abeiva - Brazilian Association of Importers of Motor Vehicles the government should further detail the rules and make vehicle import more flexible, as entity believes that competition from foreign products, with more equipped models at lower prices, can serve as incentive to force domestic industry to improve the quality of its products. “We need to understand their details. The good side of this new regime is that it opens doors for companies that want to set up factories in Brazil. On the other hand, we must clarify what is going to be of the import items situation - as they need a better treatment – with the establishing of limited import quotas, free of IPI increase. Otherwise the market will lose these companies and, therefore, the power of comparison with the vehicles domestically produced. If it prevails, the effect would be contrary to the interests of the Brazilian consumer”, said president of Abeiva, Flávio Padovan.

THE FUTURE OF IMPORTERS AFTER THE NEW AUTOMOTIVE REGIME 28

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market

In the last balance sheet published by the entity, the marketing of imported vehicles through its affiliates ended the month of June with a sales drop of 9.6%, compared to May. Altogether were 11,202 licensed units against 12,389 in the previous period. Imports demand reduction is justified, especially by the Excise Tax (IPI) raise, but dollar raise and increase restriction of credit by the banks also influence the result. Compared to June last year, the retraction is even higher, 41.04%. The month traditionally strong in brand new vehicles demand, had 19,130 imported vehicles licensed last year. First half closing also showed a drop in the segment sales of 21.06%. So far, 70,971 licensed units, against 90,158 in the same period last year. “Fall is the trend for coming months, because 30 percentage point IPI rate will fall on all new units to be nationalized”, stated Padovan. Although Abeiva is favorable to the new automotive regime, the organization is in negotiations with the government for help, regardless of the latest changes. According to Padovan, the government had promised that until the end of May it would announce a help package for the imported, however, until the closing of this issue, the process was standing still in Brasília. “Companies that import cannot simply close doors and leave. It is very difficult to justify the sales drop we are having

“It will be impossible to absorb all the IPI, so that some makes have increased prices between 7% and 15%.”

Paulo Sergio Kakinof, former CEO of Audi Brasil.

to their headquarters, but I think the Government realizes that”, says. According to the entity CEO, no company is passing on the total IPI adjustment to the prices. “It would be a suicide, but we need to recover the margins”, he says. Padovan further argues that associates pay about R$ 6 billion in taxes annually and generate 35,000 jobs. Even with a positive expectation for a change of government behavior, Abeiva states the help is to give a new “breath” to the segment, but won’t solve the problem. “We are asking for a measure to ease the IPI burden. We want an equal and fair treatment”, he says. For the former CEO of Audi Brasil, Paulo Sergio Kakinoff, IPI raise stirred the imports market. According to him, with the old rate inventories at the end, companies were forced to increasingly cut costs in order not to pass them in full on to the consumer. “It will be impossible to absorb all the IPI, so that some makes have increased prices between 7% and 15%”, said the executive. According to Kakinoff, who left the presidency of the German assembler in July to assume GOL, the effects caused by the taxes raise are here to stay and even intensified with the devaluation of Real against the Dollar. Between April and May, the U.S. currency was being negotiated at around R$ 2. Kia Motors was the make that suffered the most with the measure, as it was looking at the rising of exchange deficit. Kia was already very well positioned to grab the share of entering cars with the new Picanto, until the new IPI comes along. According to Abeiva, in 2011, Kia sold 40,660 units by June against 22,062 this year, a significant drop of 45.7%. By the way, Eastern makes were the ones that suffered the most in the period, as shown by Abeiva survey. The South Korean SsangYong, for instance, had a 44% drop in sales with 2,414 cars sold in 2011 and 1,347 this year. Effa and Lifan are also among the first ones with the highest rate of fall. Until June last year, the first had sold 4,405 units, and the second 1,524. After the raises these numbers fell to 2,796 and 946, respectively. Customers’ vanishing has also hit luxury makes. BMW sold 1,462 fewer cars in 2012 and now endures a 28.7% drop, as well as Volvo that sold 2,089 cars until June last year, and only 1,465 units this year.

Former Minister Miguel Jorge criticizes measures – Former Minister of Development, Industry and Foreign Trade and member of Barral MJorge Consultores Associados, Miguel Jorge, said to disagree with the policy of the government of President Rousseff of imposing a higher Industrialized Products Tax – Excise Tax (IPI) for imported vehicles. According to him, these products account for just 5% of the market in the Country, only 2% out of it corresponding to the Chinese. “The government acted beyond purpose and could not close the market that way”, he says. He says that about 80% of vehicles imported by Brazil, mainly from Mexico and Argentina, arrive by Anfavea - National Association of Vehicle Manufacturers assemblers. “Independent importers represent a very low percentage to threaten the Brazilian industry”, he said. Miguel Jorge believes the government should not close doors with these protectionist measures, but encourages a healthy competition in the market. “5% is too little to threaten the domestic industry. The government shouldn’t have done anything!”, said the former minister. In his analysis, even with the problems announced by the assemblers established in Brazil, in 2011, about US$ 6 billion in dividends were transferred to the parent companies. In 2012, only in the first quarter, remittances have exceeded US$ 1 billion. “Even complaining of competitiveness, companies have succeeded in making remittances higher than those of 2010”, said. According to the Central Bank balance, the remittance is higher than the values sent by the banks (US$ 3.15 bi) and the telecommunication companies (US$ 2.44 billion). These sectors are historically the ones which send values to the headquarters abroad. Agreement with Mexico – In March, Brazil imposed the maximum annual quotas for the import of cars with import duty exemption and without charging additional 30 percentage points of IPI. In the first year, which began on March 19 e runs through March 18, 2003, Brazil may buy US$ 1.45 billion from the partner. In the following year, from March 2013 to the same month of 2014 the amount will be US$ 1.56 billion. Between 2014 and 2015 the quota will be US$ 1.64 billion. Values were defines based on the average import of the last three years. If the purchases of

“The government acted beyond purpose and could not close the market that way”, he says.

Miguel Jorge, former minister of Development, Industry and Foreign Trade.

Mexican cars exceed theses volumes, the vehicles shall be taxed the same way as those vehicles from outside of Mercosur and Mexico. Former Minister Miguel Jorge classifies the agreement with Mexico as “absurd”. For him, who also was executive of Volkswagen do Brasil and Santander, Brazil has one of the highest import rates in the world (35%), therefore, there is no need to create more protection for the market. “Clearly, in this movement, the consumer decides which product is good or bad. The government does not know how to identify it”, concluded. According to what was ascertained by Automotive Business, Mexican cars imports continue to rise, representing 6% of total sales in the Country and, at least meanwhile, apparently remain immune to the quotas imposed by Brazil last March. The most recent report published by Polk consulting reveals that in April and May, after the quota imposition, Mexican vehicles sales increase over 100% in the Brazilian market, compared to the same months of 2011. The report ponders that the momentum dropped in May, but it can be attributed to the reduced imports of models at the end of lifecycle, mentioning Volkswagen Jetta Variant wagon (drop of 18.5% between April and May) and Ford Fusion sedan (-4.9%). On

Jaques Wagner, Governor of Bahia and Sergio Habib, CEO of JAC Motors Brasil, at the first unloading of Chinese make models at the port of Salvador.

In the main ports there is a large movement of loading and unloading of vehicles.

the other hand, new generations are in high, case of Honda CR-V crossover, which sales rose 61% from one month to the other. “April and May sales show that Mexican car restriction results may be different from what the Brazilian government expected”, writes on the report José Augusto Amorim, Polk analyst in charge of South America market forecasts. “It is important to note that assemblers can import beyond the limit. And, if that occurs – here is what changes – Mexican cars will pay Import Tax (from zero to 35%) plus the 30 percentage points higher IPI, the same way is paid for a vehicle imported from Canada or Germany”, he adds. For him, this should happen in the case of some makes. “”We can assume that many companies will absorb the higher costs in order to maintain its momentum”, said Amorim. Polk report points out that other assemblers should adopt the same strategy. “Fiat has raised prices of 500 hoping that sales exceed the limit. Compared to May 2011, when the car was imported from Poland, sales increased 2,820% in May this year”, says the consulting. “Chevrolet is another make that should import more vehicles from Mexico. Sonic arrived at the dealerships 32

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in early June, imported from South Korea, but should change its nationality before the end of the year”, he adds. Chinese industry – One of the reasons for the Brazilian government measures was the increasing vehicle importation, mainly from China. The year of 2011 was marked as the great advance of volume imported from that country, which makes Brazil an important market for Asians. Last year, the total volume of – national and imported - licensed vehicles in the Country, 1.91% (or 65.3 thousand units) came from China. This year the percentage dropped to 1.66% accumulated from January to June. Out of the imports, Chinese makes (JAC and Chery) accounted for 7.65% in 2011. Se excluded imports from Mercosur-Mexico axis, the Chinese occupied the second place last year by volume imported, losing to vehicles from South Korea that ended the year with 163.7 thousand licenses, according to a survey conducted by Fenabrave. Even representing less than 2% of the Brazilian market, JAC Motors and Chery announced investments in Brazil. In November 2011, Sergio Habib, CEO of JAC, revealed that will invest

Flávio Padovan, president of Abeiva.

R$ 900 million for the construction of an industrial complex in Camaçari/BA in partnership with the company headquarters. This production unit will have centers of style, design and development, test tracks and, in addition to that should generate 3.5 thousand direct jobs plus 10,000 indirect jobs. The new plant will have the task to produce a novel family of compacts, which will have a hatch, sedan and crossover. Chery has already laid the cornerstone of its future manufacturing unit in the country, in the city of Jacareí/SP. The unit will be the first one in the world to carry out a full productive process and not just assembly. Works will begin later this year and should be completed in mid 2013. With the plant installation, Chery estimates it will generate 1,200 new direct jobs in the first phase, where the initial production will be 50,000 cars/year, and 4,000 direct jobs in the second phase, when production will reach 150,000 cars/ year. The production unit installation investment will be US$ 400 million and the production will supply the domestic market and also throughout Latin America. Originally, the Jacareí unit will produce two platforms (A13 e A1), which will result in four new vehicles.

With the vehicle sales falling in Europe and the willingness of Brazilian economy, global manufacturers are preparing to intensify their activities in the country – many importers are building factories here in order to nationalize their most popular models. As to the prices, various experts believe that the “tropicalization” will not cheapen the cars that will be produced here, because most are already sold at a competitive price. The main explanation for this phenomenon is credited to the high cost of local production. A PwC consulting study in 2011 and sponsored by Anfavea (National Association of Vehicle Manufacturers) stated that making a car in Brazil is 60% more expensive than one produced in China, where the workmanship is abundant. Nationalization, however, exempts the product from taxes and from international shipping, which requires sophisticated (and expensive) logistics. “And even if there is some [cost] reduction, it is necessary to cover the investments in the factory construction”, Luís Curi, vice president of Chery, said in an interview with Folha de São Paulo. Dealer Magazine

F&I

Table 1

Simulation Assumptions

Develop and monetize Marcella Verdi

“Evolve and Monetize” because, as we show below, it is essential that the Dealer discover how they can and should move towards the new profitability trend through the F&I, especially the “I”, more highlighted from now on.

he current scenario clearly shows that nothing will ever be like before in the world of “F&I”. In fact, it begins with the own management of the dealership. I understand that there may be resistance to throw an innovative look into traditional areas of the dealership, but it cannot be understood to resist facing a new reality, which arrives in Brazil after experiencing mature markets, if we are not prepared to enjoy the good things that these changes can offer us. It is clear that the “F” return to the Dealer, or financing, is increasingly smaller. With the banking spread in the crosshairs of government and with the clear tendency for realigning margins, the return goes to 3.6% average from previous approximately 8%, which translated into numbers, means that we should look for alternatives to recover about R$ 880 per sale to recover our lost margins. See Table 1. But, how to do this? We only need to be open to modernity, with new alternatives, and restructure ourselves to exploit a world unknown in the land of profitability and that may, as added advantage, still generate customer loyalty. Secret? Not for mature markets that have learned to work with the “I” of the acronym F&I. Well, this reminds us of insurance. Right? Yes, in part, but we have much more scope to offer to our consumer market that, in average, already spends additional R$ 1,000 with accessories in their vehicles, which is a well-explored source of business and should not grow, considering the tendency of vehicles leaving the factories increasingly equipped. Well, evolving through the world of “I” possibilities, we have various insurances that can be offered to cars and motorcycle consumers, such as, to protect their investments. Among the most common, we can mention the following: • Extended Warranty to supplement the Factory Warranty; • Quick repair insurance to maintain the vehicle good conditions, covering, for

instance, the so called “Martelinho”; Protect a gap between the debt and an eventual compensation from the Insurance Company through the GAP Insurance; • Supplement the vehicle Tires and Wheels Warranty; • Supplement the Hull Insurance adding coverage for the Policy Franchise; • Protect oneself from debts with the Insurance Loan Protection Insurance or Unemployment Compensation. Believe or not, the profitability of these insurances is attractive and exceeds the margin obtained in the accessories. See the possible restructuring of margins in Table 2. Below we see that Groups such as Itavema, Saga, and André Ribeiro have strategic directive focused on F&I product sales growth. That’s what I intend to emphasize. The striking thing is that the decision to invest in F&I should be made by the Dealer. That’s the only way the project evolves into a mature process with good results. It is important to emphasize that the insurance companies must provide alternatives that add differentials, such as: • First, provide operations daily services; • Consulting; • Training; • F&I management system without additional cost; • Non-exclusive contracts. • Mainly: Offering products to increase earning opportunities for the Dealer (Table 3). However, if the investment and structuring decision does not come from the Dealer-owner, it is of no use. The same way it is true that good practices show good results in dealerships that have a structure F&I run by dedicated consultant, it is also true that the area partners should be selected by the country culture knowledge and the experience with Brazilian Dealers’ reality. •

Marcella Verdi is the Vice President of USEBENS Seguradora.

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Value of Vehicle

R$ 40,000

% Financed

50%

Financed Value

R$ 20,000

Return to Previous Context

aproximadamente 6,0% (R5) + 2,0% de bonificação (“plus”)

Table 3

Return to New Market Context

Approximately 3.6% (R3)

Respecting the Brazilian market culture – we are a Latin country – we must have “I” products adherent to the Brazilian consumer

Return to the Dealer Need of margim restoration: R$ 880

$ 1,600

-55%

• Extended Warranty • Franchise Insurance • Document Insurance • Life Insurance with monthly draw

$ 720

• Insurance for small dents • GAP Insurance

Return in the previouscontext (@ 8.0%)

• Unemployment Compensation

Return in the new context (@ 3.6%)

Table 2 Margin composition and relevance of additional insurances in the new context

Reduction of Return Impact 400

250

880 50

880

4300

Additional insurances

New total

3420 720

2000

Gross Margin

880

Accessories

Broker

Hull Insurance

Financial return

Total before insurances

Margin recovering sales – example: Extended Warranty + Small Repair Insurance + Franchise Insurance

Dealer Magazine

PRODUCTION LINE

enato Ferrari Law, which regulates the automotive industry in Brazil, establishes an agreement among the Assemblers and Dealers. This instrument, which entered into force in 1975, was a key point for the maintenance and prosperity of the industry that outlined the rights and obligations of each party for the market to develop in a healthy and prosperous. Today, Fenabrave and Make Associations work together to maintain the law, mainly in search of an open relationship among the parties, which are interdependent in the process from the conception of a product to the point when it comes to the consumer hands. “Since the Chain is the only Assemblers distribution channel, it is necessary that planning and strategies are done together”, said the Chief Officer of Fenabrave, Paulo Engler. For Engler, the market has undergone many changes over the past 10 years and, therefore, the relationship between the parties became more intense. “In the past, a model would remain in the market for five or six years. Nowadays there are about five models launched annually. Strategies must be drawn together, provided that the Dealer, ultimately, is responsible for draining

UNITED IN THE SAME DIRECTION!

this production and give feedback regarding the market to the Manufacturer. No one better than the Dealer to know the consuming public”, said the chief officer stating that retail experience is essential for the Assembler plans. Paulo Engler warns about the importance of the Make Association as a link among the Manufacturers and their Chains, especially with regard to their political and commercial representativeness. For him, Association should actively participate in the Manufacturers planning (marketing, sales and product design) in order that the makes they represent succeed in the market. “Fenabrave plays a fundamental role in this process as we work to ensure the Associations are able to pass on its positioning to the Assemblers”, concluded. “Vehicle Assemblers and their Chains are sides of a same coin, which value is defined by the ability to work together to attract the customer”, says Luiz Adelar Scheuer, of Scheuer Consultoria, responsible for Fenabrave Market Relationship Survey, that this year reaches its 16th edition. For the consultant, the success of the Chain depends directly on its market service qualification. And that also depends on the support the Factory gives, providing products and services

Paulo Engler, Chief Officer of Fenabrave, Luiz Adelar Scheuer, responsible for Fenabrave Market Relationship Survey, and Flávio Meneghetti, president of Fenabrave.

IN FOCUS, THE RELATIONSHIP BETWEEN FACTORY AND CHAIN!

The joint work among Chains and Assemblers is critical to maintain the automotive industry healthy. Strategize, define positioning and maintain the dialogues are ways to increase business and prosper in an increasingly competitive market. 38

Revista Dealer

PRODUCTION LINE

Effective actions Fenabrave has worked together with Make Association in order to oppose the large volume of direct sales in the industry. Periodically, the entity president, Flávio Meneghetti, together with the presidents of each Association, has met with several assemblers to present the problems generated by its only distribution channel, due to the practice of direct sales. Since early 2012, three meetings were held with major assemblers already established in the Country and the results are positive. “One of the makes we met with, in the following month, has greatly reduced their direct sales. This shows that through dialogue and common sense between the parties, it is possible to keep the industry profitability without harming anyone”, pointed out Paulo Engler.

that meet expectations and needs of potential buyers. “The union between Assembler and Chain is the nature of the business. The joint success depends on their ability to negotiate and facilitate their goals, benefiting the consumer. As in any relationship, disagreements may arise which satisfactory solution will only be achieved at the negotiating table”, he adds. According to Scheuer, the opening of the market in the 90s and the consequent increase of the competitiveness level among makes become more apparent the need for this union. For him, there will only be a lasting success if there is balance with favorable outcome for both partners: Chain and Factory. “Usually the union is the result of necessity. In the race to win a customer the winner will be the one with the best collective performance. Competition requires union and only the union brings a lasting victory”. Paulo Kakinoff, who until July 2 was the CEO of Audi Brazil, mentioned that he maintained a high level of proximity with the make sealers Chain. According to him, he would meet with the Dealers on a monthly basis to define products strategies, commercial and services 40

Dealer Magazine

16th Survey participation rate beats NADA strategies as well as points of sale. “At Audi Brazil, we have six regular and permanent committees. Meetings are frequent and we were always open to listen to the distribution business people”, he said, adding: “All strategies are defined with the Chain. The relationship is crucial, because the Dealers are the most trustworthy sources of market information”, stated the executive who left the automotive industry to become the CEO of Gol Linhas Aéres. Fenabrave Survey reaches the 16th issue – Fenabrave Market Relationship Survey, conducted on a semester basis, covers five segments of the automotive industry: Cars and light commercials, trucks and buses, tractors and machines, motorcycles and road implements. Inspired by the work performed by NADA - National Automobile Dealers Association, Fenabrave Survey comes to its 16th issue and consolidates as “the Dealer’s voice”. The Survey analysis will provide key elements for the Make Associations as a collective representative. “The conduction of a qualified negotiation will facilitate the process of finding the balance between the objectives of the Factory and the Chain, states Scheuer. According to the consultant, the 16th Survey suggests a fairly narrower work in the Truck and Tractor segments. Even so, according to Scheuer, also for them, the Survey points out positive aspects and indicates areas in which improvements should be implemented. “In the 16th Survey we surpass the boundary of a thousand answerers, totaling 1,186 arrays, indicating a response rate superior to 30% of the surveyed public”, celebrates the consultant, stating that his participation rate already exceed the one reported by NADA, in the United States. Based on the survey results, Scheuer is certain that, strategically, no Assembler looks down to the Chain. For him, some are more successful in the partnership, with favorable reflections for the smooth running of business. “In this respect, it is worth noting the importance of positive union among the Dealers of a same Make, knowing that unity is strength and that for the factory is important to have qualified and representative interlocutors at the Make Association”, he concludes.

Segment

Participation rate

Make with highest adherence

Cars and Light Commercial Vehicles

28,32%

Toyota and Chevrolet

Trucks and Buses

64,97%

Volvo and VW Trucks

Motorcycles

15,25%

Honda

Tractors

35,27%

John Deere and Agritech

Road Implements

54,78%

NOMA

Most desirable make Another survey annually conducted by Fenabrave refers to the Most Desirable Make, where dealers assess in all segments (cars and light commercial vehicles, trucks and buses, road implements, motorcycles and tractors and agricultural machines) which are the favorable makes of the market. In July, based on this Survey, Fenabrave ascertains the results of the Most Desirable Make by the Brazilian Dealers and, during the XXII Fenabrave Congress to be held on August 16 thru 18, at the Expo Center Norte, in São Paulo, hands over awards to the standing out Makes, to the first, second and third places in each of the five segments.

Representatives of Honda Motos, Volkswagen, Massey Ferguson, MAN Latin America and Randon receive the Award of Most Desired Make in 2011.

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SUSTAINABILITY

AUTOMOTIVE FOCUS IS THE SUSTAINABLE CONDUCT! Companies strive to provide sustainable vehicles and to apply – in their factories, practices important to the preservation of the environment. Research revealed the automotive industry is among the three of the most aligned to the principles of innovation for sustainability.

oncerned about allying their image to sustainability concepts, the companies connected to the automotive industry add high technology to offer economic and sustainable vehicles to the market. Thinking about informing and disseminating cases of success on sustainability in the automotive industry, the Automotive & Sustainability Seminar, held in São Paulo by Autodata Editora, addressed this issue. “In a not very distant future, the assemblers will not only sell vehicles, but mobility”. The statement was made by Ernesto Cavasi, officer of PrincewaterhouseCoopers, who attended the event. For the executive, the automotive industry é leader in sustainability actions and, thus, the natural way is to offer more and more options of fast and clean transport, even if not in one same type of vehicle, but a possible combination of these, such as electric bicycle, cars and trains, for example. While presenting the market with various ‘environmentally friendly’ vehicles, the companies are also concerned with recycling and 42

Revista Dealer

reuse of materials. “The recycling and reuse of materials such as steel, glass and plastic, as well as separation systems shall progress in a short period of time. Unfortunately, vehicle dismantling initiatives in Brazil did not progress due to lack of financial conditions”, explained Cavasin. According to the expert, nowadays people are more concerned about preserving the environment and, therefore, the sustainable vehicle is more and more desired by the consumers. According to research conducted by PricewaterhouseCoopers consulting, 50% of respondents (overall) have shown some interest in acquiring electric vehicles. However, only 8% would be willing to pay a little more for them, compared to a conventional gasoline-powered vehicle. When the price difference mentioned was € 2,000 to € 3,000, interest in electric vehicles dropped to 4% of answerers. “I believe the challenge is to increase the actions toward sustainability in the middle of economic crises and, at the same time, meet and understand what customers want”, said Cavasin.

For him, besides contributing to the environment preservation practices, also strengthen the companies cash. Success Cases - Fiat Automóveis works with three pillars of sustainability: Environmental, economic and social. Since 1990 the Italian assembler applies an environmental management system in its factory in Betim/MG, with effective actions and awareness work with their employees at all levels. One of the actions is to reuse 100% of solid waste, whether they are styrofoam, cardboard, wood or metal, which are recycled and re-inserted into the processes. “Fiat also reuses 99% of the water and uses alternative energy sources for lighting and water heating of the locker rooms”, explained Marco Antonio Lage, Fiat Corporate Communication and Sustainability Officer. Lage said that more than profit, sustainable practices contribute to integration of the company within their communities and, thus, for its survival in the long run. “Our social projects in communities surrounding the plant have the support of its own employees and their families.

Inside the factory we have the Fiat World Class Manufacturing, which has as main purpose the reduction of internal waste, as well as in suppliers”, he said. Honda car also used a good strategy to reduce energy consumption. Only by changing the layout and arrangement of equipment in the factory in Sumaré/SP, it managed to reduce the local consumption and saved US$ 13,000. Another practice that worked well was the investment of R$ 2 million to build its own effluent treatment station in the city, which supplies the entire production process. “The water that comes out of the production process is treated within the station. We discard water with higher quality than the one received from the public network”, boats Alfredo Guedes, Supervisor of Institutional Relations at Honda. Volkswagen sets its sustainable action on three pillars: People, products and processes. In social activities, the company owns the Volkswagen Foundation, which develops social, cultural and sporting activities. For processes, the company has prioritized the reduction in energy consumption (in 2011 it reached 26% per vehicle). In this

Honda Factory in Manaus: effluents treatment station discards water with higher quality than the one received from the public network

SUSTAINABILITY

Andre Conti

Jairo Martins, General Chief Oﬃcer at FNQ.

regard, the assembler has developed small hydropower plants in the company - one in operation and another under construction. With regard to products, the main points were the development of flex technology, the application of BlueMotion concept to the range of vehicles in the Country and the recyclability research in its products. This theme, however, is still premature in the Brazilian market, although assemblers develop their products with a focus on recycling, using materials that can be reused, there is no system, public or private, dedicated to the collection of unused vehicles – either by time use, breakage or accidents – as well as their dismount”, said Josef-Fidelis Senn, Vice President of HR and Sustainability at Volkswagen. Recoverability – According to experts, the automotive industry recycling process is still slow, but General Motors anticipated and “created” a new stage called “recoverability”. According to Alexandre Guimarães, senior manager of products engineering at GM, this recovery goes beyond recycling. The process aims to capitalize, somehow, even the parts that cannot be recycled, which are sent to power plants to be

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incinerated and turn into energy. “One example is the Chevrolet Cruze. Its recyclability rate is 85% that added to recoverability comes to 96%. And the latest project, the S10 pickup, has the same rate for recycled parts, but reaches 99% for recoverability”, he said. According to Guimarães, currently 8% of all materials consumed in the production process of the manufacturer is reused. Before, it only accounted for scrap, which was discarded. Wheel box protection, painted bumper guards and radiator grill are examples of parts produced with reused material. Among the most aligned, but still on the way – A survey conducted in 2011, with 63 respondents of companies affiliated to the National Quality Foundation (FNQ), revealed that the automotive industry is among three of the most aligned to the principles of innovation for sustainability. Other two segments mentioned were the energy and pulp and paper. The study also shows that 97% of the respondents consider it essential that organizations innovate to seek sustainability for the business, the economy and the planet. Despite this awareness, 70% of the study participants believe that companies, in general, are concerned but do not direct their investments to innovation with focus on sustainable growth. The survey also showed that 27% of respondents indicated the management as the main concern of the companies they work for, while 22% mentioned sustainability, and 19% cost reduction. For Jairo Martins, General Superintendent at FNQ, the survey results show that most companies still ignore the dimension of sustainability problem. “While the economic bias – which success is measured by GDP - dominates the thoughts, the current model of sustainable development will not change and social and environmental issues will not be included in the organizations agendas. It is a challenge to the companies management”, said Guimarães. The executive emphasizes that companies still relate innovation to research and technological development, but it is necessary to have a management systemic vision and understand that innovation must also occur in the leadership, in marketing activities and in business model. “Innovation for sustainability must be part of companies strategic planning. Nowadays, organizations see sustainability as a management subset and not as integral part of the process”, he concludes.

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economy

PRICES FALL TAKES CONSUMERS TO DEALERSHIPS With the lower cost of credit, consumers go to the stores in search of opportunities to acquire vehicles.

n May 21, the Brazilian government launched a series of measures for the recovery of the Brazilian economy. This package includes the reduction of Excise Tax (IPI) on car purchases and of Financial Transaction Tax (IOF) in individual credit operations. In return, the industry committed itself to promoting additional discounts on their tables (2.5%). Thus, the final price of popular vehicles fell nearly 10%. For models with 1,000 and 2,000 cylinder capacity engine, the expectation is that the final price will be reduced by 7%. During the speech, the Minister of Finance, Guido Mantega, stated that banks (public and private) have already committed to the government to increase and facilitate credit for the sale of vehicles. “They promised to increase the amount of resources to finance vehicles, offer longer plans with a greater number of installments and to reduce the required minimum down payment. The cost of loans will also be reduced - lower interest rates”, Mantega said. In return, the government will reduce banks compulsory deposits requirements for these loans - this reserve requirement was raised in December 2010 for those plans that were long and without down payment, which made this type of financial operation to become more expensive and restrictive, making it impossible to buy brand new cars for thousands of consumers. Another factor that will contribute to reheat loans for car purchase is the significant reduction of IOF for consumer credit, which had been increased in early 2011, has now been cut by 1 percentage 46

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point, from 2.5% to 1.5%. “This will reflect directly on the cost of financing, which if cost 20% tomorrow would drop to 19%. It is a significant incentive”, emphasized Mantega. With just this measure the government estimates a tax waiver of R$ 900 million by the end of August, incentive package term. The combination of lower interest rates (already announced by various banks), reduced reserve requirements and IOF cut, in the government assessment, shall lead to the cheapening of immediate funding and, therefore, cause a rapid resumption of concessions. That is what Dealers also expect; they had been complaining about the near disappearance of 60 month plans, of high down payment requirements (never below 30%) and of major constraint in records approval – financial companies are approving just 30% to 40% of applications, especially due to the increase in defaults that almost doubled last year, from 3% to 5.7%. Brazilian Federation of Banks (Febraban) said in a statement that the measures announced by the government contribute to the reduction of the spread – difference between the banking cost to raise funds in the financial market and the rates charges do customers for loans and financing. The organization also believes that credit will increase in the country. “These measures will help accelerate growth to the expansion of credit at rates higher than the GDP [Gross Domestic Product) growth and the continuous reduction of the banking spread and the cost of credit transactions”. According to Guido Mantega, private banks must reduce the cost to borrowers under penalty of losing customers to public banks which have Dealer Magazine

economy

Foto Agencia Brasil

Flávio Meneghetti, presidente da Fenabrave e Carlos Henrique Carvalho, técnico de planejamento e pesquisa do IPEA.

expanded access to credit with interest increasingly smaller. “Competition is the best solution”, said the Minister. For him, this type of measure by the public banks creates a strong competition similar to what happened right after the international financial crises of 2008, when banks tightened the access to credit and ended up stepping back in the face of public sector line releasing. He qualified as “outrageous” the cases where a loan can cost up to 80% per year or the accountholder who pay 200% per year for using the money offered in special overdraft checks. “Selic at 2% rate should be the dream of every Brazilian”, argued Mantega. According to the Minister, with easy credit and lower interest rates, the domestic market will strengthen and create conditions for a sustained growth of the economy. Mantega maintained his forecast that the country will grow 4.5% this year. According to him, the incentive measures positive 48

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impact for the production area on the economy should be felt soon. One of the biggest spreads in the world – The day after the announcement of the measures, the Ministry of Finance reported that the banking spread in Brazil is one of the highest in the world. The survey by the Ministry of Finance is based on information from the Central Bank and the IFS (International Financial Statistics). According to the survey, the Brazilian banking spread, that, besides profit, also consists of default rate, administrative costs, reserve requirements and taxes levied by the federal government, among others, is currently at 28.5 percentage points. Now, the banking spread in Portugal, for instance, is 21.5 points, while the value recorded in Uruguay is 5.9 points. In Mexico, Russia, Australia, China, Canada, South Korea and Japan, the spread is 3.7 points, 3.6 points, 3.2 points, 3.1

points, 3 points, 1.8 points and 1.0 percentage point, respectively. Mantega said again, however, that the banking spreads remain high in private banks. “Therefore, we have large margin of reduction that can be done in the financial cost to the Brazilian consumer. With the reduction, the consumer will have access to more goods and have a more favorable situation in their household budget”, he concluded. “We must make the interest reduction get to the consumer’s pocket. It is hard, but it will happen. The public banks are working on it. They say it is not easy to implement new systems, but it will happen. Even because there is no reason at all to keep higher interest rates. It is a safer country, inflation is under control, and basic interest rates are falling. In 15 to 30 days we will have practical results in the major types of credit”, added Mantega. Recently, the Minister adopted a harder tone when demanded the increase of credit and the reduction of interest rate charged by the private banks in the country. According to him, the Brazilian financial institutions are among the world’s most profitable and, therefore, have margin to reduce the interest rates charged on their credit lines to the population.

Reflection on sales – After the first month of the new measures, the consumer returned to the dealerships to take advantage of opportunities. After the entire rebilling process of Chains inventories, vehicles prices fell an average of 10% compared to what was practiced before the measures. According to Fenabrave survey presented in early July, vehicle distribution industry (cars, light commercials, trucks, buses, motorcycles, implements) grew 8.46% in June compared to May (493,512 were licensed in June against 455,007 in May). However, the comparison between the months of June 2011 and 2012 show the industry grew by 2.21% and, in the accumulated, the fall reached 3.11%. According to Fenabrave, there was a positive impact on the tax relief created by the government to stimulate the industry, which contributed to the increase demand for new cars. “We ascertained a significant increase in average daily sales, which rose from 13,000 units in May to 16,000 in June, but it is worth considering that the car sales made in May were licensed in June, impacting most heavily on the results”, said the President of Fenabrave, Flávio Meneghetti.

Minister of Finance, Guido Mantega, and Minister of Development, Industry and Foreign Trade, Fernando Pimentel, announcing measures to reduce levies and taxes in order to stimulate consumption and accelerate Brazilian economy growth.

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Legal support

economy

Symbolic return of bus chassis to establish a manufacturer

Paulo Engler and Jeferson O. de Castro

Bureaucracy and current tax rules make bus segment logistical and operational costs become more expensive.

Given the current situation of the economy, Fenabrave revised its projections and expects a drop of 1.47% across the industry this year.

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For Meneghetti, the adopted measures, such as IPI and IOF reduction, vehicles margins reduction, release of reserve requirements, banks willingness to recalibrate their credit score criteria and reduce interest rates, helped to awaken the consumer interest for the purchase or anticipation of car exchange. However, the President emphasized that the current financing have a distinctive profile from those practiced between the years of 2009 and 2010, which had 60 month term and no down payment, which, further the Minister, concentrate most of the current default that reached 6.1% in May. “The funds now have a 20% to 30% of down payment. That is, a less risk credit profile for the banks that have increased records approval rates, which now exceeds 50% versus 35% before the measures announced by the government”, says Meneghetti. According to Fenabrave President, the consumer that is able to make a down payment for the vehicle exchange is taking the opportunity to buy.

“It is worth recalling that a car today costs approximately 8% less than two years ago, and the real interest rate is close to 3% per year, i.e., near the real cost of money, like in the first world”, evaluates the President of Fenabrave. According to the organization President, some components are troubling and may affect negatively the outcome of sales in the industry. “We have a tricky situation in Europe, with Greece defining its debt situation and Spain asking for financial help. Brazil had a small growth of GDP in the first quarter of the year, which makes us believe that we will reach a result of 2% in 2012 rather than 3.0% or 3.5% as the market anticipated. All that can impact on the results of vehicle sales in the year, but we are not pessimistic”, states Meneghetti, who admits: “It is no use to imagine that we will achieve the levels of growth of 2010. The important thing is to have a stable economy that allows us to grow moderately and consistently, without peaks of oscillation”, concludes the President of Fenabrave.

he excessive bureaucracy that falls upon the tax instrumental obligations is a well-known fact to all of us; when it comes to State Value Added Tax (ICMS) legislation the issue is multiplied by 27 (26 States and the Federal District). Add to that the vast Brazilian territory, plus the rigidity in the interpretation of tax laws, add a pinch of public authorities’ leniency promoting the acceptance of operations inside the legal assumption aiming to facilitate the production outflow and marketing. The result is the addition of other non-operating and logistical costs to the final product, the result of fiscal irrationality that plagues our country, which in our view can be immediately excised. In the experience of our activities we encounter a wide range of excessive red tape that penalizes production and marketing with reflexes on final consumption. However, we will address the lack of legal provision for the issuance of income/outgoing invoice of goods symbolic return. After the electronic invoice coming, which for the automotive industry occurred as from November 2008, including the Fiscal and Accounting SPED requirement, there is no more reason for the lack of a symbolic return in the ICMS legislation, inasmuch as the State Tax Authorities control is in real time since then. It is indisputable that by mid-2008 the effective control of symbolic return was very difficult for the States, especially in interstate operations, which somehow justified their inexistence. Despite the IPI legislation accept this possibility, the territoriality and hypothesis of tax incidence allow the federal tax such a prerogative, even before the advent of electronic invoices. To illustrate as the lack of symbolic return forecast adds non-operating costs to the product, let us analyze the following hypothesis. The City Hall of Pelotas, State of Rio Grande do Sul, acquires school buses from a manufacturer established in São Bernardo do Campo, State of São Paulo, and, in order to meet the specific requirements the vehicle must have, the manufacturer ships the bus chassis to an autobody assembler established in the city of Caxias do Sul, State of Rio Grande do Sul. Very well, as soon as the bus is properly assembled and, therefore, ready for use, the company in Caxias do Sul/RS has no legal provision under the ICMS law to deliver the vehicle in Pelotas/RS, in which case the distance between those cities is 379 Km by BR116 highway. Due to the fiscal insanity we live in, the autobody assembler of Caxias do Sul/RS must physically return the vehicle to the manufacturer in São Bernardo Campo/SP, covering 988 Km by BR116 highway, only to exchange the fiscal document and return covering more 1,367 Km,

on the same BR116 highway, to the city of Pelotas/RS and deliver the order. It is a waste of time, unnecessary costs of transportation and insurance, and add to the logistics cost all the consequences involved. The following example is real and unfortunately occurs on a daily basis. The program of the Brazilian Ministry of Education and Culture known as “Way to School” was created in 2007 by the National Fund for the Development of Education with the purpose of renewing the fleet of school vehicles for States and Municipalities, in order to ensure safety and quality of the students transport and contribute to reducing school dropout, increasing, by means of daily transport, the access and permanence in school of students enrolled in basic education in rural areas. The school vehicles acquired by the States and Municipalities go through the periplus illustrated, if there were no logistical costs generated by the fiscal madness, we surely would have more competitive prices. We emphasize that, despite the example above focus on the government program in question, almost all bus sales are made by using the chassis assembling service and, therefore, all companies of transportation of mass transit and passengers, fleet owners and other customers who need to acquire these vehicles incur the same costs outlined above. We propose a paradigm, it is the SINIEF Adjustment No. 11 dated of September 30, 2011, which establishes discipline related to symbolic return operations of self-propelled vehicles. In general, this rule applies when a transaction between Assembler and Dealer results in the return of the vehicle to the recipient for various reasons, including direct sales to consumers. To avoid the vehicle ride throughout Brazil, in the same manner we pointed above, CONFAZ established a fiscal rule that significantly facilitates the operation, streamlines costs and maintains the fiscal control required. In our view, we believe that a solution similar to that is sufficient and necessary for adapting operations with bus chassis. In case CONFAZ will establish a rule that admits the symbolic return of goods, various operations will benefit and unencumbered by unnecessary costs, reducing bureaucracy, facilitating the outflow and accounting for significant gains on the consumption side. The electronic invoice environment, the SPEDs (Fiscal, Accounting and PIS/COFINS) and covenants of exchanges of information and fiscal intelligence between the States and the Federal District, will guarantee that the supervision has all the control over operation flows and their respective book keeping, being able to reduce bureaucracy that would be justified in the past.

Jeferson Oliveira de Castro, Chairman of Economic and Fiscal Affairs Committee of Anfavea. Paulo Engler, lawyer, Master in Tax Law by PUC-SP, and Superintendent Officer of Fenabrave.

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behavior

Mário Bock

Marcos Alves

MOTORCYCLES LEAD RATE OF TRAFFIC ACCIDENTS In Brazil, accidents involving motorcyclists are growing every year and one of the main factors is the lack of the driver traffic education.

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urrently, in Brazil, 26.35% of the fleet in circulation is represented by motorcycles. Only in 2011, 1,940,564 units were licensed. Motorcycles of up to 150 cc represent 87% of total vehicles sold in this segment, according to a survey of 2012. These motorcycles are the gateway for those people who want to be motorized, however, are not always prepared to drive these vehicles in large cities. Many drivers take to the streets without ever having learned to drive a motorcycle. The surveys measuring accident rates indicate that most of the people involved in this type of accident are formed by novice riders. “The profile of those victims of motorcycle accidents we serve at the São Paulo Hospital is: men, mostly young people under 35 years, who end up using motorcycles as means of transport. Most of the victims have got their driver’s license no long ago and some do not have a license” explains Júlia Greve, physiatrist and associate professor at USP Medical School. Preparation and experience in conducting these vehicles are critical to safety. “The rules for a motorcycle circulate in traffic are the same for any given vehicle, but the motorcycle requires more attention. Some drivers do not comply with the rules and change them the way they see fit causing accidents”, said Marcelo Rosa de Rezende, Master and Doctor of Orthopedics and Traumatology, serves at the Hospital das Clínicas in São Paulo, and attended the workshop sponsored by Abraciclo in São Paulo, in May. According to the panelists who attended the event, the government is also responsible for the alarming number of accidents. According to specialists, the number crown and the rulers do not move a thing to improve the education in traffic. But specialists warn that qualifying for a motorcycle driver license doesn’t necessary mean the driver is ready to use the vehicle in the correct way in traffic. “For nearly 10 years the numbers already indicated the trend that the motorcycle would be among the vehicles that more victims would make in the traffic of big cities. Time went by, the fleet increased and nothing was done by the government to prevent this” says Dr. Júlia Grave. For Magnelson Souza, President of the National Federation of Driving Schools (Fenauto), the preparation of motorcycle riders still needs to improve. “The few practical lessons are not able to forming good riders. Unfortunately, this training is

lousy and does not meet the necessary requirements to train good drivers”, he argues. The Ministry of Health Information System (SIM) Mortality data indicate that in 2010 there were 10,279 casualties for motorcycle in traffic. These figures represent 25% of the total registered in Brazil. “Motorcycles are always in evidence, because no matter how small the accident is, it always creates a physical trauma in the driver”, explains the Doctor. Good behavior in traffic, regardless the vehicle, is a very important factor to prevent accidents, according to experts. The public transport deficiency in the big cities only causes the daily increases of motorcycles on the streets and, thereby, also increases accidents. But it is worth mentioning that the

Specialists gather at the workshop organized by Abraciclo, in May.

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behavior

Fotos Mário Bock

Marcelo Rezende, Magnelson Carlos de Souza, José Eduardo Gonçalves, and Júlia Greve during the III Abraciclo Workshop.

term ’education’ refers to both senses of the word applied: the specific training and the compliance with the rules for social interaction, that is, regardless the vehicle, the driver must respect and abide by the rules”, said Rezende. Partnership for safety – Another important point mentioned by the specialists is the proper use of safety equipment. “It is very important to use the helmet and protective clothing to drive a motorcycle but, more importantly, is to be disciplined and obey the traffic rules”, added Júlia, explaining that, depending on the severity of the accident, not even the equipment can avoid major traumas that occur in most cases, in the head and the legs. Abraciclo (Brazilian Association of Manufacturers of Motorcycles, Mopeds, Scooters, Bicycles and Similar) and the Institute of Orthopedics

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and Traumatology of the Hospital das Clínicas of São Paulo signed a partnership to analyze the real causes of traffic accidents involving motorcyclists. Abraciclo will bear the cost of the project (an investment of R$ 420,000) and will also compile data that will be collected at the scene by agents of the CET (Traffic Engineering Company) and by the Civil and Military Polices. Data are still to be supplemented by the hospital staff at the hospital admission. The goal is that the accident would cease to be sad statistics. We will have a questionnaire that will allow us to analyze the events triggering factors in São Paulo traffic. The motorcycle rider, the other party involved (driver or pedestrian) and witnesses will be heard, and the street and place infrastructure will be assessed”, said President of Abraciclo, José Eduardo Gonçalves.

Mobility

Neither subway, nor train or bus: all of them!

The only thing the population hopes is that corridors and buses actually have quality and efficiency in order to really convince people to use them as alternatives to the subway. Adamo Bazani

After the rail modals overcrowding and crashes have become unbearable, the obvious comes up: It is not possible to think of railway without bus and vice versa.

o you remember the days when our mothers thought that a famous ointment found in the market was a solution to everything? Chilblain, headache, depression, hurt after a knock – “Grab the ointment, my son!”. Candidates and pre-candidates’ discourses on public transportation were similar. Do you want to improve mobility? Subway, subway, subway, subway, subway and subway, only. Buses and suburban trains improvements? They got just one line. They would not give as much impact. Indeed, “subway, subway and subway” is the solution for all problems of traffic and transport in São Paulo or in others medium and large urban centers. But it is only part of the solution. The demand for transport is so repressed, and growing every day, that it would be naive or simplification of the problem to think that the subway, the bus, the train, the VLT (Light Rail Vehicle), the monorail or the teletransportation by themselves would meet the transport needs. Is it obvious? Apparently yes! But it seems only now the transport authorities realized that. The subway expansion is something that São Paulo needs. But expanding the subway without offering a service to supplement or facilitate their overcrowding does not seems reasonable any longer. And then, on-call critics use keywords, such as the ointments of our mothers, and think they explain it all. One of them is the “overlapping”. It is a nice word to be repeated. It gives the impression that the person speaking understands the subject. Indeed, overlapping is something to be avoided, as it concentrates costs and supply of transport in just one place, while other areas are underserved. But offering buses and subways at the same time on certain routes of

São Paulo and neighboring cities is not overlapping, it is a need. Now, the new President of Metrô, Peter Walker, in an act of lucidity, show that the subway does not eliminate the need to have bus corridors and implies that only buses also cannot meet all the needs. The idea of creating express corridors to link CPTM stations to Metrô stations with more demand goes in the direction mobility needs: Various types of transport are complementing each other and not competing against one another. The buses would serve part of the subway demand, would prevent negative routes – in which passenger would ride up to a stop to switch buses and make part of the way back in another line – and would speed up the trips, which today are responsible for citizens waste of a lot of time of their lives in cars, rail cars or buses. Studies already show another positive factor: they will connect the CPTM - São Paulo Company of Metropolitan Trains, the Metrô, the SPTrans (which manages the city buses) and the EMTU – Metropolitan Company of Urban Transport (which takes care of intercity buses). These bodies should meet more often to coordinate their efforts. The buses would make stops and would follow from one station to another directly. Below there are some ideas for bus corridors: • Vila Matilde Station to Sé Station: Metrô Line 3 – Red – is the most crowded. Total of approximately 1.5 million passengers; • Santo Amaro CPTM Station, in the South of São Paulo, to the Pinheiros Station, West side, to relieve the demand of Esmeralda line 9. • Caieiras City to Lapa Station, in the West of São Paulo: The goal is to reduce overcrowding in Rubi line 7.

Studies serve a request by the Department of Metropolitan Transportation and should be submitted to the Transportation Steering Council. SPTrans and Metrô are now studying alternatives for the most critical points of line 3. Peter Walker has admitted that part of the operational issues occur in the subway due to the high demand, much higher than the modal should serve. The fact the subway relies on the buses and express lines as alternatives does not mean weakness or that the system does not work well or is insufficient. Other on-call critics shout out loud that the subway is using of artifices to the use of buses because they cannot serve all their passengers. Counting on buses help is not an artifice! What may be a weakness to many people, it is actually a lucid act to show that the subway alone does not solve all

mobility issues. It is one of the rare times a modal company president is no fiercely defending it means of transport and look at other options. It is a lesson learned the hard way that the bus corridors cannot be pushed into the background, as it happens in political speeches. The only thing the population hopes is that corridors and buses actually have quality and efficiency in order to really convince people to use them as alternatives to the subway. The only negative fact about it is that São Paulo city, instead of discussing ways to persuade car drivers to leave their private vehicles at home, have spent time thinking on how to allocate the demand of one public transport to another. A sign that there is still a lot to do in the mobility industry. And the solution won’t be only a BRT, only a subway, only a VLT, only a monorail.

Adamo Bazani CBN Radio journalist, specialized in transport.

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Sales

WE SELL LIFESTYLE. CAR IMPLIES PROGRESS.

Clotaire Rapaille, a Psychologist, Anthropologist and one of the most famous international consultants engaged to help makes such as BOEING, LG, FIAT, GENERAL MOTORS, CHRYSLER and BANCO ITAÚ to decipher the Cultural Code of consumers and sales teams, believes that the sales people should have a “happy looser” permanent posture, i.e., the sales professional must be a tireless enthusiast, even hearing many say “no” as the first customer’s answer. More than that, according to Rapaille, “if you are a sales person and have not heard many NOs in your day, then you haven’t done your work”. The expert in deciphering cultures and developing products and processes that fit consumers will deliver the closing speech at the XXII Fenabrave Congress, to be held on August 18, at 11:30 AM, at the Expo Center Norte, in São Paulo, SP. The event thematic programming will happen on August 16-18 and will feature 40 lectures, in addition to ExpoFenabrave.

uality products, good marketing campaign and effective advertising are not synonymous of good sales. This statement was made by the Psychologist and Anthropologist, with a Ph.D. in Medical Anthropology from the Sorbonne University in Paris, Clotaire Rapaille. For him, who has over 10 books published and develops works for various makes on consumer behavior, it is necessary to know what people really want to awaken the need to purchase, as if the product were essential to their lives. “People don’t buy cars. They use cars. And the car is a symbol of where you are in life, it means your progress. When a consumer buys a car, he or she is already thinking about the next one, of a higher category, because it is where he or she wants to get”, says Rapaille. In one of the stories where he tells about the automotive industry there is the query received from the Cadillac make which intended to launch a compact car a few years ago. “I immediately advised them not to follow on with the initiative for a simple reason: The make is a symbol of status, of ostentation, and nobody wants to buy a modest Cadillac”, warned Rapaille at the time. The French specialist has a particular interest in archetypes – the underlying patterns in psychology that she light on the human condition – and show to organizations how to use these patterns to polish their marketing and sales. The Psychologist, who will be the attraction at the closing of XXII Fenabrave Congress, promises to show to the Brazilian Dealers their formula for success that transforms makes and products in best-selling products worldwide.

The thrill of “hunting”. The archetype of the seller – According to Rapaille, the vendor has its own archetype: The “Happy Looser” is a person who does not give up in face of rejection and, in fact, look for a job in which he or she has the opportunity to reverse rejection. According to him, of course, this has implications for the management of these sales staff. Rapaille’s research shows that the major motivation in sales is not 58

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the money, but the thrill of the hunt. “[Foster] large meetings at which a seller receives the gold medal of rejection”, he suggests. “Jonathan sold 500,000 computers last month, but received 5 million rejections! It may sound ludic, but this is how a sales force is motivated – especially in the United States, where contradict expectations is something very dear”, he explains. “The good salesperson can hear a ‘no’ ten times before someone finally says ‘yes’. And yet, move on. Those who understand this theory can find better ways to lead and motivate these people”, he says. Rapaille studies the impact of culture on businesses and markets. He is the author of several books on the cultural meaning of articles used on a daily basis such as shampoo, coffee and cars. The most recent of these works is The Culture Code launched in Brazil. His work attracted the interest of some of the world largest companies such as Citibank, DuPont, Exxon Mobil, General Electric, IBM, P&G, Unilever, Fiat, General Motors, and Chrysler, which are on the list of companies to which the guru has provided consulting. Rapaille helps the organization to understand how to operate in a global scenario in which there is a growing conflict between different cultural norms. As the Psychologist notes, “the West will be more capable to understand a business partner in Japan if it knows that the Japanese has more than 10 words to define ‘quality’, each with a distinct meaning”. According to Clotaire Rapille’s theory, each culture has a set of archetypes that govern the behavior of its members – a collective unconscious, as it were. And companies look for him so that he tries to decipher the collective unconscious of customers, employees and other public. “Archetypes are the core of the sale. The art of selling is complicated anywhere in the world, but is always influenced by the collective experience”, explained the speaker, indicating that his theory can be applied in the process of selling the vehicles at the dealership. According to Rapaille, an archetypal pre-conditions the consumer response to biological events: Birth, death, sex, among other issues. “There are Dealer Magazine

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How to manage the ‘Happy Looser’? In the opinion of Clotaire Rapaille, a manager cannot try to sell the idea that the sellers will always triumph to his or her salespeople. First of all, because these people would not believe him or her. Second, because the work would its appeal. “Those who manage sales people needs to demonstrate that they understand how hard it is to lose. You have to make the seller happy – otherwise he/she becomes an ‘Unhappy Looser’, the last thing a manager wants. Clearly money is not a minor factor in the salespeople management. In certain industries, a salesperson may earn US$ 1 million in just one year. My studies show, however, that money is not what really makes a salesperson goes forward. It is rather the value they attribute to the battle. A good salesperson is like a hunter. Who is interested in the fox? In a hunt, sometimes there are 100 people on 100 horses chasing 200 dogs. The hunter spends the whole day in this race. Falls from the horse, breaks his/her leg. And at the end of the day, not even hunted the fox. But the hunt was wonderful”, concludes the Psychologist.

also variations from culture to culture. Archetypes also arise in religion, in dreams, in art. They are present in myths and epics, basic rituals such as hygiene and nutrition habits”, he adds. For him, the archetype is so rooted in the culture that the individual loses consciousness of its presence. “Just as you can speak a language without understanding its grammar, it is also possible to act in a culture without knowing what archetypes are prevalent there”. To illustrate the business relationship among the local cultures, Rapaille says that the archetype is a cultural and biological, therefore, like the language, which has close relation with the archetypes, the language is innate, programmed. “Being human is to speak. But, what about the fact that in Japanese there is no word for ‘intimacy’? It is a cultural, not biological, and centuries of history behind it. Japan is a small country, dense. There, people live squeezed. Privacy is a rare thing – and intimacy as well, something that reflects the language”, he adds. According to the speaker, the archetypes vary according to each culture, but certain aspects of the archetype are universal. He gives the example of the Warrior “that, in Japan, its main manifestation is perhaps the samurai. In the United States, it is the cowboy. In both cultures, however, the Warrior is a fighter that the company faces and wins”. Form him, in the same line, although the manifestation of the

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seller archetype varies from culture to culture, there is an ‘archetype-standard’, so to speak. “The salesperson is the ‘Happy Looser’. Whether is conscious of it, it’s like an addict in the game. What he/she wants is the emotion. The compulsive gambler knows, deep down, they will lose most of the time, but, even so, is moved by the possibility of winning. The salesperson has the same temper. He is a master at losing. His advances are rejected 90% of the time, I would say. Why would someone choose this profession? For the thrill of the hunt. I can assure that the salesperson will never be an endangered species. There will always be people who appreciate and want this job, as there will always be people addicted to gambling”, he says. Rapaille says that there is no exception in this salesperson’ condition. According to him, whatever the culture, there is not a seller that doesn’t lose most of the time. “So, the one who triumphs is the one who is happy even with the loss. It is one whose self-esteem cannot be shaken, or who does not lose hope or is devastated with failure”, he explains. The speaker cites the example of the North-American entrepreneur Donald Trump. “At the height of his career, Trump was on the cover of dozens of magazines. Then he took a tumble, but shook the dust off and was able to rebuild. Trump is an epitome of good salesperson – in this case, the product he sells is himself. Trump is a ‘Happy Looser’”.

Archetype of a dealership – Different sales techniques are used in the automotive industry for marketing the vehicles at the dealerships. Technological attributes, safety, comfort and even financial arguments are the protagonists of the salespeople at the time of convincing the customer that he must buy that vehicle. According to Rapaille, you must create a relationship between the customer and the make, creating a genuine community, as already happens with Ferrari and Harley-Davidson, for example that created true lifestyle concepts to their businesses. “The customers belong to the make”, he says. According to the speaker, the Dealers must act in the customer’s emotional. Creating a kind of projection or target that, in this case, would be the make top-notch vehicle. “The buyers can opt for a simpler one, however, they have to show what their dreams are. Where they wants to get”, he says. With this technique, the Brazilian Dealer will be able to generate a channel of loyalty with the customers, and the probability of making a second sale is greater. “Show the customer that now he is buying that car, but some time from now, they can come back and change the smaller by a larger one, evolving until they get the vehicle of their dream”, he adds.

What’s new in the automotive market New technologies and high competitiveness in the automotive industry cause the assemblers established in the country to develop new products seeking to win the consumer. This is Iveco case, which has submitted the renewal of its semi-heavy line, equipped with Euro 5 technology engines, according to Proconve7 rules. Fiat was another make that submitted a renewal of its range of products, redesigned the Siena EL sedan, the Palio Weekend and the Strada pickup. In addition, Yamaha introduced a new model to the market: The YZF-R1, with 1,000 cc propellant.

TOYOTA ETIOS IS DISCLOSED IN JAPAN In June, Toyota began the activities of pre-launch of its new compact car for the Brazilian market, which production in its new plant in Sorocaba (S) and sales are confirmed to start in the second half of 2012. The new Toyota compact car for Brazil was named Etios, whose origin goes back to the Greed work ethos, meaning “Original Essence”. The new Toyota Etios will arrive in the domestic market with two types of frame, hatchback and sedan. Although developed simultaneously with the Indian cars sold with the same name, the vehicles engines are different and have a more solid style than the Indian model.

The hatchback version will have 1.3 and 1.5 engines, both with 16 valves. In the four-door version, only the most powerful version. As a matter of strategy, Toyota has not release the power nor the touch of either. According to Akio Nishimura, project leader, in the Brazilian settings the Etios hatch 1.3 accelerates from 0 to 100 km/h in 11.9 (with alcohol in the tank), 12.5 km/h, with gasoline. It has five gears. Toyota executives promise “competitive” prices to compete with Gol and Palio hatch version, and Voyage and Logan sedan. The goal is to sell 70,000 Etios in Brazil in the first twelve months of production.

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IVECO INTRODUCES ITS NEW LINE OF SEMI-HEAVY TRUCKS

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PEUGEOT 508: TECHNOLOGY AND MODERNITY Peugeot launches in the competitive Brazilian automotive market the large 508 sedan of the French assembler, which marks the European manufacturer in the D segment (large cars). With the new model Peugeot reaffirms its presence and also its ambitions in a universe in which owns historical tradition. The car, produced in Rennes-La-Janais, France, and in Wuhan, China, comes equipped with the same 3008 and RCZ engine. The 1.6l 16V powertrain has direct injection system of gasoline and delivers 165 horsepower. The sports coupe returned to the rank of large sedans, which not only replace the 407, as it shall shake the beautiful

models fans, and the Hyundai Azera and Volkswagen Passat rivals. According to Peugeot, 85% of 508 buyers will be comprised of men, out of which 82% are married with children. The assembler announces it will not bring the wagon version of that model to Brazil. “The SUVs and crossovers have replaced the wagons worldwide. It is not worth bringing the wagon version of a car that already has a low volume of trading”, explains Frederic Battaglia, Chief Marketing Officer of Peugeot Brazil. The Make expects to sell 200 units until the end of the year and, in 2013, license 30 to 40 cars/month.

In May, Iveco introduced its new line of semi-heavy trucks – Iveco Tector - to the market. With a wide range of configurations, the new models will compete in the more competitive market, which represent about 35% of all trucks sold in the Country. With 41 possible configurations, the assembler divided Tector line into two ways of finishing: Iveco Tector and Iveco Tector Attack, the latter being an option for customers who prioritize lower purchase price. Both models come with two year warranty, being a whole year and another year for the powertrain. The strategy to increase comfort, expand range and create a lowcost version was born of a survey conducted by Iveco together with customers of semi-heavy trucks e of more comprehensive development program ever conducted by Iveco outside Europe. “The new Iveco Tector generation was designed to fit the market of semi-heavy trucks like a glove, for the benefit of customers”, explains Marco Mazzu, CEO of Iveco Latin America. For the commercial officer at Iveco, Alcides Cavalcanti, the new models will surprise the market. According to their perspectives, the goal is to position Tector as one of the bestselling models in Brazil. “Our goal is to gain a percentage point of market share, per year”, he says. According to Cavalcanti, the strategy for achieving this goal will be to

retain current customers and attract new customers through test-drive. The new generation of Iveco Tector and Iveco Tector Attack semi-heavy trucks can be configured in 41 different versions, from three cabin types (short, bed and the new version high-roof sleeper cab). The vehicles are equipped with FPT Iveco engines of 218 horse power and 280 horse power, three options of transmission (6.9 and 10 speed), three types of traction (4 x 2, 6 x 2 and 6 x 4) and four wheelbases. There is also a mechanical horse version, 4 x 2, to special services, which can be purchased on request. With this new fleet of semiheavy trucks, Iveco will play all the possibilities of the truck segment that grew the most (+11%) in 2011, with 60,000 units sold in the Country. It is also the most balanced, with the presence of all assemblers – and in which Iveco share has been growing. When it launched the first generation of Tector, in 2008, the make had about 3% of share in this category; in 2011, closed down with 7.4%. With the new Tector generation, Iveco expects to accelerate this growth trend. The new Iveco semi-heavy vehicles are marketed in more than 100 dealers throughout Brazil, with prices between R$ 147,000 and R$ 255,000, which is the most complete version, the top line.

WITH MORE POWER, MERCEDES-BENZ LAUNCHES C CLASS IN THE COUNTRY In June, Mercedes-Benz, in Brazil, announced the arrival of the C 63 Coupé Black Series, described as the C Class most powerful ever produced by the assembler. The sportive is equipped with 6.3-liter V8 engine of 517 horses at 6,800 rpm with maximum torque of 620 Nm/5200rpm. According to the manufacturer, the 1,730 kg car accelerates from 0 to 100

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km/h in 4.2 seconds. Top speed, electronically limited, is 300 km/h. Traditionally, the same way it does with AMG line – as it is called the high performance range, Mercedes released only the price in dollar of the new machine: US$ 337,800 (equivalent to R$ 684 thousand).

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launches

FIAT INTRODUCES PALIO WEEKEND, STRADA AND SIENA EL TO THE MARKET After the success of Fiat Uno and the Palio in 2011, Fiat decided to renew its portfolio and redesigned the Siena El sedan, the Palio Weekend and the Strada pickup. “They are references in their segments and represent a significant part of the Fiat commercial force”, explained FIAT CEO, Cledorvino Belini. He emphasized that already sold 4.7 million units of the three models. To renew all 15 current versions, Fiat invested R$ 400 million - part of the R$ 10 billion program of 2011 to 2014. Siena and Palio Weekend models represent 8.4% of Fiat sales in the Country and help keep the make at the top of car segment, which has a 21.8% share. On the other hand, Strada is directly responsible for the first place in light commercials licensing, with a share of 23.6%. On top of that ranking for 12 consecutive years, Strada holds 47.7% of compact pickup sales, which represents 35% of the licenses for utility vehicles. With the arrival of these new releases, Fiat executives estimate that the whole set sales growth about 10%, something like 2,000 units/month more. Siena and Palio Weekend, which now sell close to 3,500 /month (each model), would go to the threshold of 4,000 to 4,500/month. Now, Strada would jump from 11,000 to 12,000/month. “It

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was a challenge to renew all at once, but we hope to gain more market and thus eliminate the deferral of purchase by the consumer who, usually, always wait for the next generation of products when just one family element is renewed”, explains Edison Mazzucato, product Chief Marketing Officer. The new range of Strada pickup has nine versions, consisting of Simple, Extended and Double Cabins, three finishing levels (Working, Trekking e Adventure) and now with three different engines: Fire 1.4 HP, E-torQ 1.6 16V and E-torQ 1.8 16V, and now offers the Double Cab in all versions. For the Adventure version, the model can also be purchased with the new exchange Dualogic® and differential lock Locker. Now the new Palio Weekend is available in four versions, which has three engines at its disposal: Fire 1.4, E-torQ 1.6 16V and E-torQ 1.8 16V. As the new Strada, the Palio Weekend configuration, in its Adventure clothing, can also be equipped with exchange Dualogic® and the differential lock Locker. The Siena EL sedan, which keeps the old identity, comes with a very complete list of equipment compared to its competitors and options of Fire 1.0 and 1.4 engines.

YAMAHA YZF-R1 RECEIVES NEW TRACTION CONTROL Willing to displace their competitors the 1000 cc models, BMW S 1000 RR, Kawasaki ZX-10R and Honda CBR 1000RR Fireblade, Yamaha WZF-R1 was introduced to the domestic market with the new traction control ‘Traction Control System (TCS)’, with seven different levels of performance. For those who like adventure, the good news is that this new system can be completely shut down and this is the most important novelty of the model. According to Yamaha, the new R1 will represent 7% of the Brazilian market in its segment. It is expected that the novelty will be a sales success because it has a technological novelty. “Yamaha YZF-R1 introduces an unprecedented Traction Control System with seven levels of action, which works in conjunction with an optimized ECU configuration for acceleration and controllability, for medium and high speeds. Safety and total control available from the technology inherited directly from Yamaha YZR M1, Yamaha continues to lead the MotoGP championship. With this appeal to the safety and know-how we aim to add about 14% to the model sales”, explained Fabio Lucio, Sales Manager at Yamaha Brazil. Equipped with the same four-cylinder engine in line, DOHC, liquid-cooled, 998 cm3 of capacity and crossplane crankshaft. The pistons are positioned at 90° from each other and this result in an interval of unequal ignition (270°,180°, 90°, 180°), i.e., each cylinder corresponds individually. The engine

is fed by a Mikyni electronic fuel injection with nozzles of 12 holes and auxiliary injectors continues producing 182 horsepower at 12,500 rpm. As in the previous version, the intake ducts are variable (YCC-l), keeping its length increased up to 9400 rpm and thereafter reduced to improve performance at high spins. The R1 has received some aerodynamic and visual changes, altered the weight distribution and reprogrammed the electronic center. Small adjustments that, according to the make, were made to make the super sportive even more controllable. With suggested price of R$ 61,490, the new Yamaha YZF R1 2013 has already started to be sold.

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Factors of success in automotive retail

Stephan Keese

To maintain market position, assemblers need to increase the Dealers’ performance.

he Brazilian automotive market has seen an astronomical growth in the last decade, the number of sold units reached 3.3 million units in 2010. Even more impressive is that this increase should continue, since Brazil has overtaken Germany as the world fourth largest automotive market in 2010 and can achieve a position among the top three in 2015. With the heated economy and new competitors in the industry, assemblers cut prices and encourage the discount sales, reaching Dealers’ margins squarely. Manufacturers are also aggressively acting in direct sales to fleets, resulting in a market flooded with second-hand cars. Although this is great for consumers, it is a burden to manufacturers, unless they have good dealers selling their products. The problem is that they never got used to a dynamic market, and largely still operate with antiquated methods. Traditional assemblers, with Dealers’ Chains, can benefit from the scenario prioritizing excellence in sales, rather than being tied up to price cuts. The focus should be on activities that bring revenue, obtained from new car sales, reliable service and increased sales of parts. Manufacturers also need to customize their Dealers’ Chain based on regional differences in Brazil. The cultural diversity, preferences and purchasing behavior of consumers need to be taken into account in the sales strategy. The consolidation of Chains is necessary due to the excessive number of small Dealers. They are not able to perform a consistent flow of investments, or to offer the type of services needed to get good margins and a solid reputation. In the future, the Chains will have fewer groups of nationwide presence Dealers, more shops and sales points. Thus, they will gain in scale and efficiency,

especially through outsourcing and professionalizing its management. Assemblers can do a lot to change the current mindset, because there is considerable untapped potential, especially in financing and insurance, second-hand cars, after-sales and parts. While after-sales guarantee a good profit margin for Dealers (still far from European margins), they also have an important role in improving customers’ satisfaction. Most Brazilians only uses the dealership services during the warranty period, as they are considered expensive and unreliable. After three years, only 10% of consumers still use them for service and maintenance. Simple measures, such as the introduction of fixed prices, increased levels of quality and improved customer service would do well to change that perception. A proactive approach with regard to the lack of manpower qualified to sell, which hinders the proper performance of Dealers, is another important measure. Many entrepreneurs struggle to make a turnover of 30-50% per year. Assemblers could help with proper training or the development of an attractive career path. Rewards for performance and competitive compensation would be infallible ways to professionalize the workforce. An even greater collaboration among assemblers and Dealers would benefit both parties. Brazil still has a long way to go with regard to the automotive retail. Market will certainly continue to grow, but excellence in sales and performance of the Dealers are the right ways to succeed. A new approach is needed for the industry, combining a new strategy for sales and after-sales with optimization of dealerships Chains and ongoing training programs for officers and salespeople.

Stephan Keese is the partner responsible for the automotive segment of Roland Berger Strategy Consultants.

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