The South American automobile market is set to grow significantly by 2025, becoming one of the top three growth markets globally for light vehicle sales and presenting opportunities for improvements in fuel efficiency and reduced CO₂ emissions, according to a forecast by IHS Automotive, a provider of comprehensive content, expertise and insight on the global automotive industry.

IHS Automotive forecasts that nearly 2.3 million additional vehicles will be sold in South America by 2025, equal to the output of 10 modern assembly plants. Most of the growth will occur in Brazil, followed by Argentina and Colombia.

In late 2012, Brazilian lawmakers enacted legislation providing tax benefits aimed at encouraging manufacturers to improve vehicle efficiency and reduce carbon emissions, and increase local research and innovation. Brazil Ministry of Trade and Industrial Development (MDIC) hired IHS Automotive Consulting to help it understand the growth potential under the new law and provide guidance on how Brazil could  improve the fuel efficiency of Brazilian vehicles and reduce CO₂ emissions by 2017.

Paulo Cardamone, Managing Director, IHS Automotive Brazil, noted that “The new automotive regime will promote green technology, help Brazilian consumers by significantly improving the fuel efficiency of light vehicles and, in the process, make Brazilian vehicles technically competitive with those in Europe, the U.S., and Asia. Brazil can become a net exporter of vehicles in the not too distant future.”

IHS is working with several automakers and suppliers to help them understand and implement plans to support the new requirements in Brazil.