Latin America, Central America, and the Caribbean are witnessing unprecedented automotive growth, propelled by emerging technologies, changing consumer preferences, and innovative business models. From Mexico’s booming car rental market to Brazil’s transformation in electric vehicles, the entire region is filled with growth potential.
Mexico: Pioneering New Leasing Models
What’s Happening?
In 2023, Mexico’s vehicle subscription market reached 1,857 units and will have grown an impressive 42% by 2024 year-end — and it is the Non-OEMs (original equipment manufacturers) and startups who are leading the charge. This growing sector aligns with consumer needs for flexible, convenient car access, enhancing the automotive industry in Mexico.
Key Growth Opportunities
The vehicle subscription ecosystem offers a promising avenue for introducing electric vehicles (EVs), such as plug-in hybrids (PHEVs) and battery electric vehicles (BEVs), into Mexico’s automotive landscape. This shift could attract both individual consumers and corporate clients, eager for sustainable and affordable vehicle solutions.
Strategic Imperatives for Success
- Transformative Megatrends: Vehicle subscription models offer a cost-effective alternative in a region where car acquisition and maintenance are often financially burdensome. Educating potential customers over the next 2–4 years could be a pivotal growth strategy.
- Innovative Business Models: The subscription model holds strong potential in the shared mobility domain, particularly for ride-hailing, food delivery, and last-mile logistics. By covering extra costs, car companies could significantly boost competitiveness.
Competitive Advantage: While traditional OEMs have yet to enter the vehicle subscription market in Mexico, they may launch similar services within 1–3 years. Integrating hybrid and electric vehicles and offering value-added services could be key to customer retention in this evolving ecosystem.
Click here to discover more growth opportunities emerging in Mexico’s automotive industry.
Brazil: A Hotspot for Automotive Expansion
What’s Happening?
As the largest automotive market in Latin America, Brazil expects to sell 2.4 million units in 2024, reflecting an 8% growth rate. With $400 billion allocated to infrastructure investments between 2024 and 2026 under the Growth Acceleration Program and New Industrial Policy, significant growth is expected for multiple sectors within the automotive industry in Brazil.
Key Growth Opportunities
OEMs, rental companies, and leasing firms have immense potential to adopt vehicle subscription models, aligning with the segment’s popularity. Collaborations between OEMs and rental companies, such as those between Audi, Volkswagen, and LM Soluções de Mobilidade, exemplify the power of partnerships in the Brazilian ecosystem.
Strategic Imperatives for Success
- Transformative Megatrends: EVs are gaining traction in Brazil, driven by growing consumer awareness and an increasing array of available models from OEMs.
- Competitive Intensity: Chinese OEMs are expanding their presence amid the automotive industry in Latin America — especially Brazil — by establishing dealerships or forging partnerships, creating a more competitive landscape and encouraging local players to enhance their offerings and pricing.
- Innovative Business Models: Automakers are also enhancing their digital connectivity services, boosting competitiveness and customer loyalty across the automotive industry in Brazil.
Click here to discover more growth opportunities emerging in Brazil’s automotive industry.
The Caribbean: An Evolving Automotive Space
What’s Happening?
The Caribbean automotive market has rebounded post-COVID, with rising vehicle sales driven by stable fuel prices, a growing demand for SUVs, and innovative banking and financial services. The entry of Chinese OEMs and EV models is further fueling this momentum within the automotive industry in the Caribbean.
Key Growth Opportunities
An enhanced customer experience is becoming the leading differentiator in the Caribbean. Companies are leveraging digital tools like augmented reality (AR) to facilitate virtual showrooms, offering contactless, engaging car-buying experiences that stand out in a competitive environment.
Strategic Imperatives for Success
- Geopolitical Impact: Regional dealerships are welcoming Chinese OEMs and exploring diversified vehicle segments to capture competitive industry share.
- Innovative Business Models: Traditional OEMs are exploring advanced vehicle technologies and new business models, broadening their reach in the automotive industry in the Caribbean.
- Transformative Megatrends: By targeting multiple megatrends simultaneously, companies are realizing synergistic benefits. Government funding and regulatory expansion across converging megatrends are key growth drivers.
Click here to discover more growth opportunities emerging in The Caribbean’s automotive industry.
Get Ahead with Strategic Insights from Frost & Sullivan
Frost & Sullivan provides detailed analyses on the automotive industry across Latin America, Central America, and the Caribbean, highlighting transformative trends, emerging growth opportunities, and competitive dynamics to keep your business one step ahead. Download our exclusive perspectives on the automotive industry in Brazil and Mexico, and the evolving markets in the Caribbean to gain a strategic advantage.
