Brazil auto industry records strongest first half in years as sales surge and policy debate intensifies

Vehicle production in Brazil grew 8.8% in the first half of 2026, reaching 1.37 million units, the best result for the period since 2019, according to the National Association of Automotive Manufacturers (Anfavea). The sector expects total registrations of more than 3 million vehicles in 2026, up from 2.5 million in 2025, with first‑half registrations already at 1.42 million, a 20% increase year‑on‑year.

Sales in June rose almost 30% compared with the same month in 2025, driven by a mix of government financing programs, the extension of tax‑exemption for imported electrified vehicles, and strong competition from new entrants. Chinese maker BYD climbed to fourth place in the national ranking, overtaking several traditional brands.

Anfavea has called on the government for predictable implementation of the tax reform and warned that the rapid expansion of semi‑knocked‑down (SKD) and completely knocked‑down (CKD) assembly regimes could cut up to 70% of direct auto‑industry jobs. The association also raised concerns over the lack of prior debate on the renewed zero‑tariff quota for imported electric and hybrid kits worth US$463 million.

Overall, the Brazilian automotive market is experiencing a notable rebound, with production forecasts raised to 5.8% growth for the year and a projected 2.8 million units manufactured, while export volumes continue to decline.