Young, tech-savvy and future-focused, Philipe Andrade, 23, and Carlos Alberto Andrade, 26, represent a new generation at Brazil’s auto group CAOA. Founded in 1979 by their father, Carlos Alberto de Oliveira Andrade, CAOA manufactures, imports and sells vehicles in Brazil, operates an assembly plant in Anápolis producing Hyundai and Chery models, and runs a large dealership network for Hyundai, Subaru and Chery. The Andrade brothers have announced plans to begin producing cars for another Chinese brand, Changan, later this year.
CAOA’s Anápolis plant doubled output from about 30,000 vehicles in 2023 to roughly 60,000 the following year and expects to reach 70,000. Despite around-the-clock production, CAOA is not yet a market heavyweight. A Bright Consulting study in Campinas, São Paulo, forecasts that by the end of 2030 one in five new cars sold in Brazil will come from China.
Historic arrival in Argentina
A similar shift is underway in Argentina. On January 20 the Chinese car carrier BYD Changzhou docked for the first time, unloading 5,841 vehicles at the Port of Zárate on the Paraná River. The shipment included fully electric models and a hybrid SUV. BYD, the world’s largest electric vehicle maker by unit sales, began marketing in Argentina last year and operates through a wholly owned local subsidiary, keeping much of the value chain under Chinese control.
BYD’s medium-term goal is to export 50,000 vehicles per year to Argentina, a target linked to recent policy changes by President Javier Milei. Milei has progressively liberalized the market for hybrids and EVs and introduced an annual quota of 50,000 cars that can be imported without the standard 35% tariff. The quota could remain through 2029, allowing up to 250,000 vehicles to enter duty-free.
Elsewhere in Mercosur, Uruguay saw a surge in EV sales: the Uruguayan Automobile Association (ACAU), representing 26 major automotive companies, reported a 147% jump in EV sales in 2025.
Europe hesitates as competition intensifies
The arrival of Chinese vehicles heralds fierce competition across Latin American car markets. European automakers had hoped a recently signed EU–Mercosur free trade agreement would bolster their position in Argentina, Brazil, Paraguay and Uruguay. Instead, the European Parliament referred the deal to the European Court of Justice for legal review, creating uncertainty over its provisional application and signaling that Europe may not be a reliable partner for negotiated trade commitments.
For the automotive industry, an EU–Mercosur agreement would reduce high tariffs in Mercosur—ranging from 14–18% on vehicle parts to as much as 35% on new cars—and open export opportunities. A spokesperson for Germany’s auto industry association VDA said tariff cuts would create new export prospects for Mercosur countries and strengthen their development. After the Parliament’s January 21 decision to seek ECJ review, VDA President Hildegard Müller called the vote “a disastrous signal” that could delay the agreement’s entry into force significantly, possibly by years, and urged clarity on provisional application.
Germany’s high stakes
German automotive firms maintain a substantial footprint in Mercosur, operating about 310 sites across the region—mostly supplier facilities providing local jobs. In the first half of 2025 German manufacturers produced 289,200 passenger cars in Mercosur, mainly in Brazil and Argentina, while 18,400 vehicles were exported from Europe to the region during the same period.
As global auto market competition intensifies, the balance of power is shifting rapidly. The battle for South America’s two largest car markets is underway, with Chinese makers expanding fast while European involvement faces political and legal headwinds.
This article was originally written in German.
