How Uber drains carmaker profits in Latin America's biggest market

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NSTcarsbikesandtrucks: Cheap access to new cars is turbocharging the growth of Uber and rental car companies in Brazil, as well as lifting automakers’ sales - up 7 per cent this year.

Instead, he rents Brazil’s best-selling car, the Chevrolet Onix hatchback, for 390 reais a week from Localiza Rent a Car, the country’s largest rental company.

Cheap access to new cars is turbocharging the growth of Uber and rental car companies in Brazil, as well as lifting automakers’ sales - up 7 per cent this year. Meanwhile, the top three rental companies had record profits in all but one year since 2015, financial statements show.Latin America’s largest domestic auto market offers a glimpse of a worst-case scenario for global automakers in coming years as ride-hailing apps and their partners eat away both carmakers’ profits and consumer appetite to buy vehicles.

By contrast, GM, despite leading the market every year since 2015, has lost so much money in Brazil that it has considered shutting down factories.“We are living a critical moment,” he wrote. In effect, Brazilian rental companies, bolstered by Uber’s scale, have taken on the role of lessor usually fulfilled by dealerships in other markets. But unlike dealers, often small businesses tied to brands, the rent-a-car market is more concentrated and cost-sensitive, pushing down wholesale prices.

“With that demand you guys can grow in scale ... buy more cars, and obtain higher discounts from automakers,” Varner said, calling it a “virtuous circle” for Uber and rental companies.

 

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