Brazilian vehicle exports showed mixed performance in early 2026, increasing significantly to Mexico while declining sharply to Argentina. Growth in shipments to Mexico reflects stronger demand conditions and efforts by Brazilian OEMs to diversify export destinations, while the drop in Argentina is linked to weaker domestic demand, tighter import controls and foreign exchange constraints.

Overall exports remained supported by regional demand adjustments and production planning by automakers, with light vehicles representing the bulk of volumes. The shift indicates an ongoing reconfiguration of South American automotive trade flows amid macroeconomic instability across key markets.

Source: Automotive Business      Read The Article

PSR Analysis. Diversification supports volume stability but depends on sustained competitiveness against Mexican domestic production and global platforms. Short term performance will remain sensitive to Argentina’s macroeconomic normalization and trade policy conditions. The trend suggests continued adjustments in production allocation, logistics planning and market positioning across the Mercosur automotive value chain.  PSR

Fabio Ferraresi is Director, Business Development, South America, for Power Systems Research

OEMs adjusted output in response to lower order intake, particularly in the heavy duty segment. The result highlights ongoing volatility in Brazil’s commercial vehicle cycle and limited short term impact of policy support measures on production levels.

Source: AutoData      Read The Article

PSR Analysis. The contraction indicates that structural demand drivers such as freight activity and credit conditions remain more decisive than industrial policy incentives in the short term. Market recovery will depend on cargo volume growth, financing availability and operator confidence. The sector remains in a cyclical adjustment phase, with production planning closely tied to order backlog dynamics. Medium term effects of Mover Brazil will likely materialize gradually through efficiency gains and fleet modernization rather than immediate volume expansion.  PSR

Fabio Ferraresi is Director, Business Development, South America, for Power Systems Research

The vehicle is expected to be produced locally and positioned in the compact SUV segment, supporting Volkswagen’s regional electrification roadmap. The launch reinforces the company’s focus on hybridization technologies adapted to Brazilian market conditions and regulatory trends.

Source: Automotive Business     Read The Article

PSR Analysis. The Tukan signals Volkswagen’s strategic alignment with Brazil’s ethanol ecosystem by prioritizing flex hybrid solutions over full BEV adoption in the near term. This pathway offers lower infrastructure risk and faster market scalability but depends on cost competitiveness and consumer acceptance. The project reflects an expansion stage within the brand’s regional electrification strategy, with potential spillovers across Mercosur supply chains. Market impact will depend on pricing strategy, local content levels and policy incentives for hybrid technologies.  PSR

The initiative includes automation systems across assembly processes and aims to strengthen the company’s local manufacturing footprint in response to demand in the construction sector. The move supports domestic supply capability and aligns with broader industry trends toward digitalization and advanced manufacturing in heavy equipment production.

Source: Revista MT     Read The Article

PSR Analysis. The investment in automation reflects the Chinese-German company’s belief in South America Construction Equipment, as it gains productivity and brings cost optimization. Benefits include improved scalability and quality control, though returns depend on sustained construction activity and fleet renewal cycles.

The project is in an expansion stage, with competitiveness linked to localization levels and supply chain resilience. With the investment, capacity should reach 480 units per year.  PSR

Exported from Brazil, Mercedes-Benz Axor Debuts in Argentina
Mercedes-Benz has introduced the Axor heavy duty truck in Argentina, supplied from its Brazilian manufacturing base. The model targets long haul and regional freight applications and expands the brand’s portfolio in the Argentine market, leveraging Mercosur trade integration.

The launch occurs amid a challenging macroeconomic environment in Argentina, with demand shaped by currency volatility and restricted financing conditions. The Axor strengthens Mercedes-Benz’s regional product strategy by aligning Brazilian production with export demand across South America.

Source: Automotive Business    Read The Article

PSR Analysis. The Axor launch highlights continued reliance on Brazil as a regional manufacturing hub for heavy duty trucks within Mercosur. Market penetration will depend on Argentina’s macro stabilization and freight sector recovery, while currency risks remain a structural constraint. The move supports capacity utilization in Brazil and reinforces cross border supply chain integration. Competitive pressure will center on pricing, financing availability and operating cost efficiency in a constrained transportation market.   PSR

Toyota’s engine manufacturing plant in Porto Feliz (SP), Brazil, will not resume full production until 2028 after suffering severe structural damage caused by a storm in September 2025. The facility, responsible for producing flex-fuel ICE engines for models such as Corolla, Corolla Cross and Yaris, was heavily damaged, requiring complete reconstruction. Only the original foundation slab will be reused, with a new industrial building designed to incorporate higher levels of automation and a more compact manufacturing layout.

During the reconstruction period, Toyota implemented contingency measures, including the installation of a temporary structure in Porto Feliz to maintain partial engine production. Part of the workforce was reassigned to the Sorocaba plant, while other employees entered temporary layoff programs. The company plans to test a new productivity and manufacturing concept by the end of 2027, with full operational normalization scheduled for 2028.

Source: AutoData     Read The Article

PSR Analysis. Toyota has implemented a temporary multi-origin supply chain, importing fully assembled engines—mainly from Japan—while performing final assembly of semi-knocked-down units in Brazil. This hybrid model mitigates short-term production risks but increases logistics complexity and FX exposure. The use of Japan, Turkey, and Indonesia reflects global manufacturing flexibility, yet signals reliance on external capacity during the Porto Feliz shutdown. Local assembly of flex-fuel engines helps preserve partial local content and regulatory alignment. As a contingency structure, the model entails higher lead times and cost sensitivity. Its viability depends on disruption duration and exchange rate stability, with potential margin pressure if prolonged.   PSR

Fabio Ferraresi is Managing Director, South America, for Power Systems Research

A fresh tender will be prepared only after updated studies and technical surveys; no timetable has been announced. The original procurement had been suspended in December 2025 amid industry requests for clarifications, including from Volkswagen Caminhões & Ônibus. The cancelled tender would have included 13 different bus models, with capacities ranging from 15 to 60 seats and specifications for rural and urban routes.

The Caminho da Escola program, established in 2007 to support school transportation for students in rural and remote areas, represents a significant source of new bus demand for manufacturers.

Source: Diário do Transporte    Read The Article

PSR Analysis. FNDE’s revocation introduces uncertainty into the bus manufacturing market by delaying a major public procurement that was expected to support fleet renewal and stable production volumes in 2026. Aligning the tender with recent tax-exemption changes will require additional technical work and may alter vehicle specifications or cost assumptions.

The lack of a defined relaunch schedule adds timing risk for OEMs and suppliers, potentially compressing order books and affecting capacity planning. While the program’s eventual relaunch could restore demand visibility, interim delays may impact production forecasts and cash flow for industry players with exposure to Caminho da Escola contracts.

Our PSR Brazil office monitors this topic closely, since it may affect a significant portion of bus production in Brazil and all MHV segment in Brazil.   PSR

Fabio Ferraresi is Managing Director, South America, for Power Systems Research

In January 2026, the Brazilian federal government launched the Move Brazil Program, a credit support initiative totaling approximately USD 2.0 billion. The program aims to support the domestic truck manufacturing industry and stimulate fleet renewal amid a sharp downturn in heavy-duty vehicle demand.

Financing will be provided through BNDES with annual interest rates between 13% and 14%, grace periods of up to six months, and repayment terms of up to five years, capped at approximately USD 10 million per beneficiary. Eligible beneficiaries include independent truck drivers, cooperatives, transport companies, and large fleet operators, with 10% of total funding reserved for independents and cooperatives.

Financing is restricted to new trucks manufactured in Brazil and compliant with Proconve P8 emission standards, as well as used trucks (model year 2012 onward) meeting Proconve P7 requirements and local content criteria. The program will be available for six months and is positioned as a short-term measure to mitigate layoffs and production cuts in the heavy truck segment.

Source: AutoData     Read The Article

PSR Analysis. The Move Brazil Program is strengthened by financing rates set below the country’s base interest rate (SELIC), easing credit constraints and prompting previously deferred fleet renewal decisions to advance. With base interest rates expected to decline over the next six months, the program’s temporary nature should be offset by the reduction of the base interest rates. This end result is the increased likelihood of continued order flow and production stabilization.   PSR

Fabio Ferraresi is Director, Business Development, South America, for Power Systems Research

The outlook is supported by expectations of improved credit availability, federal support programs such as Carro Sustentável and Move Brazil, and a strong commodities export environment, which bolsters freight demand. The heavy truck segment, which faced a steep decline in 2025, is expected to contribute to overall market expansion. Fenabrave’s forecast assumes modest macroeconomic improvement and continued easing of credit conditions.

Source: Automotive Business / Frenabrave     Read The Article

PSR Analysis. The ~3% market growth projected for 2026 is consistent with updated industry fundamentals, particularly in commercial vehicles. While Power Systems Research initially assumed a lower growth for trucks and buses, actual December results came in below expectations, effectively lowering the comparison base.

With revised sales and production data now incorporated in the PSR database, and scheduled to be reflected in the Q2 2026 database revision, the growth outlook aligns closely with Fenabrave’s projections and stands above ANFAVEA’s expectations. This adjustment suggests that the 2026 expansion reflects a normalization from a weaker level in 2025, supporting a view of gradual recovery and improved stability.   PSR

Compared with the previous generation, the A60 delivers a 15% gain in fuel efficiency and 5% increase in productivity per loading cycle. The redesign includes improvements in drivetrain, transmission, traction control and operator ergonomics, reflecting Volvo’s renewed lineup update for articulated trucks in Brazil.

Source: Automotive Business     Read The Article

PSR Analysis: The upgraded A60 meets rising demand from mining, quarrying and large-scale infrastructure sectors by combining high payload, improved fuel economy and proven off-road capability, translating into lower operating cost per ton transported. Its enhanced drivetrain, traction control and stability — crucial in challenging terrain — should increase uptime and reliability for high-utilization fleets.    PSR

Fabio Ferraresi is Director, Business Development, South America, for Power Systems Research

Brazil and Colombia have agreed to extend for 12 months the bilateral automotive quota allowing duty-free export of up to 50,000 Brazilian vehicles per year. The mechanism, which had expired in September, risked reinstating a 16.1% import tariff on Brazilian ICE and flex-fuel passenger vehicles entering the Colombian market from 2025 onward. From January to September 2024, Colombia remained Brazil’s third-largest automotive export destination, receiving 38,500 units (+55.2% YoY), below but close to the annual quota.

Source: Autodata      Read The Article

PSR Analysis. The quota renewal preserves short-term market access for Brazilian OEMs, avoiding a steep tariff shock that would reduce competitiveness in Colombia’s price-sensitive segment. The agreement also buys time for both countries to renegotiate structural terms of the automotive pact, including tariff schedules, local content rules and potential alignment with broader regional industrial policies. The 50,000-unit ceiling remains modest relative to Brazil’s export capacity, signaling that future gains depend on deeper regulatory harmonization and Colombia’s internal demand recovery. Maintaining preferential access is strategically relevant as Brazil seeks to sustain export volumes amid domestic overcapacity and uneven Latin American markets.    PSR

Fabio Ferraresi, is Director, Business Development, South America, for Power Systems Research