Chinese Checkmate? BYD and GWM's Strategies for Advancement in Brazil

The Brazilian automotive industry is being drastically redefined. In a swift and aggressive move, Chinese automakers BYD and Great Wall Motors (GWM) have gone from zero to conquer a 7.2% share of the national market in just three years, according to the National Federation of Automotive Vehicle Distributors (Fenabrave).

The advance, driven by a focus on electrification and billion-dollar investments, directly challenges traditional manufacturers and forces a discussion about the direction of the country's industrial policy. The offensive is, in part, a consequence of the fierce price war and excess production capacity in the Chinese market, making global expansion a strategic necessity for these companies.

BYD: The Strategy of Scale, Volume, and Tax Controversy

BYD has adopted a rapid and massive market penetration strategy. The company has already sold 150,000 electrified vehicles in Brazil, and in July, its sales share reached 5.4%, positioning it ahead of brands with decades of local production, such as Renault, Nissan, and Citroën. In the 100% electric vehicle segment, its dominance is almost absolute, with 77% of sales.

Aggressive logistics and marketing to overcome distrust

The expansion was made possible by aggressive logistics. The company uses its own fleet of ships, such as the BYD Shenzhen, which in May carried out the largest unloading of electric vehicles in the country, with more than 7,000 units at the port of Itajaí, Santa Catarina. In addition to imports, BYD had to convince its headquarters to invest in broadcast television marketing to overcome the historically negative perception of Chinese products in Brazil.

The Chinese automaker has defined a R$5.5 billion investment in the former Ford plant in Camaçari, Bahia, as the cornerstone of its global expansion strategy. The facility, which will become the company's largest operation outside Asia, unveiled its production lines in early July.

The new Bahian factory won't be limited to the domestic market. BYD plans to transform Camaçari into a strategic export hub for the entire American continent.

The SKD model and the reaction of the national industry

Initial production, however, is in the SKD (semi-knocked-down ) model: the body arrives from China already welded and painted, and the remaining components, mostly imported, are assembled locally. It was precisely the SKD model that generated the most controversy. BYD requested a temporary reduction in import tax on the kits from 18% to 5% for electric vehicles and from 20% to 10% for hybrids.

Traditional industry, represented by the National Association of Automotive Vehicle Manufacturers (Anfavea), and governors of six states reacted, arguing that the measure would disrupt the national production chain and "transform the search for cheaper cars today into unemployment tomorrow." The sector warned of the risk to R$60 billion in investments and 50,000 formal jobs.

Under pressure, the government adopted an intermediate solution: it brought forward the 35% rate for the kits to 2027, but granted BYD a quota of US$463 million with a zero tariff for six months.

As part of its long-term strategy for the Camaçari plant, BYD aims to deepen its integration with the local industry. The automaker has set a goal of achieving more than 50% domestic production of its vehicles by 2027.

To achieve this goal, the company is working in partnership with industry entities, such as the Brazilian Auto Parts Industry Association (Abipeças) and the National Union of the Automotive Components Industry (Sindipeças), to map and develop Brazilian suppliers capable of meeting its production standards.

GWM: Expectation of more factories and technological development

GWM, for its part, chose a different path, prioritizing full production and gradual "piece-by-piece" nationalization. With a 1.8% market share, it already surpasses brands like Peugeot and BMW, and its Haval H6 model has become the best-selling hybrid SUV in the country.

With a R$10 billion investment plan through 2032, GWM opened its factory in Iracemápolis, São Paulo, at the former Mercedes-Benz plant. The initial capacity is 50,000 vehicles per year, starting with the Haval H6, the Power P30 pickup truck, and the Haval H9 SUV.

The company's commitment goes beyond manufacturing. GWM has established a research and development (R&D) center next to the factory, which will employ 60 engineers to focus on hybrid systems, next-generation fuels, and artificial intelligence. The automaker will also begin testing its first hydrogen-powered truck in Brazil, in partnership with universities such as the University of São Paulo.

Future plans already include a study for a second factory in the country, with an additional R$6 billion in investments, aiming to increase production to up to 300,000 vehicles per year.

Chinese advance exposes differences in business views in Brazil

China's advance, therefore, exposes two business visions. On the one hand, a strategy of global scale, volume, and final assembly; on the other, a commitment to productive integration and the development of local technology.

The outcome of this competition could not only help define market leaders, but also the very future of industrialization in the Brazilian automotive sector.