AUTOMOTIVE

The automotive sector in BRICS nations represents a strategic growth opportunity for international corporations, given rising middle-class demand, urbanization, and government support for industrial development. However, the sector is fraught with systemic and market-specific risks. Regulatory instability, protectionist policies, and frequent changes in emission standards or safety regulations can undermine long-term planning and investment. Local content mandates, shifting tax regimes, and compliance complexities make these environments highly challenging for foreign players.

Over the past five years, international firms have experienced both breakthroughs and setbacks. Tesla struggled to enter India due to import duty disputes and policy inconsistency, ultimately delaying plans indefinitely. In contrast, BMW and Mercedes-Benz expanded their footprint in China by leveraging joint ventures and adapting to local electric vehicle (EV) demand, posting strong sales growth. Ford exited manufacturing in India in 2021 after years of underperformance and high operating costs, highlighting the risks of overestimating market potential. Meanwhile, Volkswagen successfully scaled EV operations in Brazil, aligning with green energy incentives and local innovation partnerships.

Operational risks such as supply chain fragility, infrastructure bottlenecks, and reliance on imported components further strain competitiveness. Geopolitical pressures—such as sanctions on Russia—have disrupted production and investment flows, while political unrest in South Africa has impacted logistics and labor stability. A growing emphasis on EV transition also adds strategic pressure, as corporations must navigate local technology gaps and consumer readiness, while aligning with shifting governmental green policies.