The equator passes through Brazil just about 300 km north of Manaus, the capital of the state of Amazonas. The city is significant, and we will revisit it later in this analysis. Because Brazil practically lies on the equator, it is the least impacted by the Mercator distortion, the phenomenon that makes countries further away from the equator appear much bigger on a cylindrical map.
To sum up, Brazil is huge. At 8.5 million sq km, it is the fifth-largest country in the world.
Population and Demographics
However, it’s not very populated, with only about 200 million inhabitants. A great river flows through the country, and nearly two-thirds of the land mass is the rainforest irrigated by the river.
Hollywood tells us that man-eating snakes and venomous insects exist in that forest. Then, the climate army says that the almost uninhabitable rainforest is an area of great ecological importance. If anything happens to it, like too many humans pilfering through it, the glaciers will start melting.
When we said great river, we meant it – the Amazon and its tributaries are the largest freshwater hydrological system in the world. The river is massive, and crossing it is a challenge compounded by flooding – it bulges many times its size in a flood. Understandably, most transportation is up/down the river rather than across it.
As a result, most prominent Brazilian cities are near the coast. Most population density is around the coast, except for some scattered cities, like Manaus, close to the river.
São Paulo is the largest city by far, followed by Rio de Janeiro, the erstwhile capital. The present capital, Brasilia, ranks third.
According to World Bank data, Brazil is a mid-income economy with a per capita income of USD 21,107 / year (PPP basis). This compares favorably against India (USD 10,166 / year) and Indonesia (USD 15,416/year) but is lower than Mexico (USD 24,720/year).
Then there is the average male height – Brazil stands at 5’7.5″ compared to India at 5’5″, Indonesia at 5’4.5″, and Vietnam at 5’6″.
Combining the above facts, we can relate to the Brazilian two-wheeler choices. We will come to that soon.
ICE Two-wheeler Landscape
Honda controls more than 75% of the Brazilian two-wheeler market. Yamaha accounts for another 18%, and everyone else is fighting for the droppings.
As we have seen in many such markets (Indonesia is another example) where Honda dominates market share, electrification is delayed.
It may be because Honda has been late to the party, and there is some reluctance from the market to turn overwhelmingly electric before the market leader is ready…we would not join the dots here.
This is the case with Brazil as well. Honda entered the market in the 1960s and manufactures out of a facility in Manaus. Brazil is an important market for the Japanese brand, and it uses the country as a Latin American base for R&D and engineering. The Honda motorcycle portfolio in Brazil is one of the widest for any country and the 160cc range of motorcycles sell the most. The portfolio includes a healthy number of dual-sport machines.
The Yamaha portfolio similarly has a good mix of motocross and dual-sport motorcycles. Interestingly, the brand has also started offering its Neos electric scooter in Brazil.
The other significant brands are Mottu, Royal Enfield, Shineray, and Haojue. They each have a 1.2-1.9% share of the market. Mottu is a local fleet operator that imports TVS Sport motorcycles for deployment, mainly in the delivery fleets. This brand’s popularity has taken off in the last few years.
Engine Sizes and Bodystyles
The aforementioned per capita income and the average height of the Brazilian male are important factors here.
In large two-wheeler markets, engine sizes are proportionate to per capita income.
Brazil is no different. Since the per capita income is higher than in India and Indonesia, the average engine sizes also move upwards.
While the sub-125cc segment is the most popular in India/Indonesia, the 126- 200cc segment accounts for the largest share of sales in Brazil. In 2024, it is estimated that nearly 54% of ICE two-wheelers sold were in this segment. Most motorcycles in this segment are 160cc, and that is the most popular engine size.
The sub-125cc segment accounted for nearly 30% in 2024. On the other side of the spectrum, the 201- 500cc engine size segment accounted for 13.4% of the overall market.
Brazil is an interesting market in terms of body styles. Street/standard motorcycles are the most dominant form factor, but they are a format that is declining in popularity. What is rising in popularity are trail bikes, on/off-road motorcycles, and dual-purpose motorcycles. While these body styles accounted for 21.2% of sales in 2022, the share increased to 27.4% in 2024. At the same time, the street/standard format declined from 43.5% to 40.0%.
Step-thrus are the next most popular format, though they have also seen a slight dip in popularity. They accounted for 22.5% of the overall two-wheeler market in 2024.
Small-wheel scooters are not very popular in the country and only account for about 8% of the market.
Local Manufacturing: Key to Success
Manufacturing inside the country is important, as Brazil has very high import duties on two-wheelers. They can go up to 104% for any motorcycle imports.
The high import duties effectively mean that if any two-wheeler brand wants to do business in Brazil, the only way to reduce duty and meet localisation norms is to set up a complete manufacturing unit with local sourcing, a massive commitment in time and resources.
Over the years, the Japanese, Chinese, and Indians have all entered the market with their local assembly operations and, at times, with local partners. In that sense, ICE motorcycle manufacturing is fairly evolved and mature, with fully developed supply chains.
Honda, Yamaha, Suzuki, Kawasaki, Bajaj (India), Dafra (local player), Shineray (China), Haojue (China), and BMW Motorrad all have manufacturing facilities in Brazil. Almost everyone is located in Manaus, the capital city of the Amazonas state.
When it comes to two-wheelers, Manaus is the name that pops up everywhere. It is the capital of the Amazonas state in North Brazil. Amazonas is the largest state in Brazil with almost all of it being covered by Amazon rainforest.
While coastal regions have access to trade and industry, Amazonas fell behind because of its geographical location.
So, back in 1957, the Brazilian government came up with the Manaus Free Trade Zone, a kind of special economic zone in Manaus that would incentivise the setting up of industry by offering them tax breaks.
The core idea is to build a sustainable industry without harming the rainforests. It was argued that dense urban clusters of industry would work better than scattering them over large rural areas. Also, in setting up the industries in such a way, there was a push away from deforestation-based industries.
Companies that set up in Manaus enjoy a number of benefits, including:
1. An exemption from import tax: This is important as Brazil does not have the complete supply chain for ICE or electric two-wheelers. Also, the exemption extends to machinery for the plant, important when one is setting up large-scale manufacturing.
2. Faster customs clearance for imports into the free trade zone.
2. Exemption from federal excise tax (Imposto sobre Produtos Industrializados) on most goods.
3. Reduced state VAT (ICMS) can be negotiated.
4. Exemption from federal social contribution taxes.
5. Corporate Income Tax Discounts
The world does not have too many Electric Motorcycles
Globally, the electric two-wheeler revolution has primarily been driven till now by scooters. In almost every country – China, India, Vietnam – where electric two-wheelers have made a meaningful impact, scooters have a large share of the market. It is not so in Brazil.
The above market share data indicates that Brazilians love motorcycles and dual-purpose ones. However, there are not many electric motorcycles in the world, particularly any that carry the Honda or Yamaha brand names. That is another reason why electric adaptation has been slow in the country.
The Price Gap is Significant
With most of the available electric motorcycles in Brazil not yet equivalent of 160cc capability, it is difficult to do an apples-to-apples comparison. Take Honda’s CG 160 Cargo, a popular model for delivery fleets. It retails at BRL 17,430. It is a 163 cc motorcycle with a top-speed capability of about 125 kph.
In comparison, the Watts W160 retails at BRL 19,311, has a lower top speed, and a limited range.
The 11% gap between the higher quality Honda and the Watts motorcycle is telling of where things are in the market. Prices have to come down and that would be achieved with higher localisation. For now, companies are trying to bridge the divide through motorcycle rentals and battery swaps.
The E2W Landscape
The E2W market is more fragmented and very small—estimated sales in 2024 were close to 11,000 units. Little-known Chinese brands dominate, the only globally known ones being Vmoto and Shineray. Even Niu has only a small presence. Shineray is unique as it is the only player active in both the ICE and EV segments.
A significant local player is Voltz, which is now in financial trouble. There is a lot of importer-driven white labeling, and the electric two-wheeler market is where Indonesia was five years ago and India was a decade ago.
E2W Manufacturing
With Brazilian pump prices at USD 1.12/litre, nearly the same as in India but double that of Indonesia, the TCO advantage is sandwiched and blunted by Brazil’s higher per capita income and the high costs of electric motorcycles. The adaptation of electric motorcycles would be a long journey. It may need a different market approach, like renting motorcycles and swapping batteries, something that startups like Vammo are already doing.
In contrast to the evolved ICE manufacturing, the E2W industry is merely starting. As of 2024, Brazil only has a 0.5% penetration of electric two-wheelers. The market is nascent, but plenty of activity is on the horizon. Any new entrant must still make an enormous commitment to manufacturing electric two-wheelers. Brazil does not have a local component manufacturing base or supply chain, though we expect things to change within the next 12-18 months.
That means that the local assembly of E2Ws is challenging.
Yet, green shoots are visible. Over the last few years, we have seen some startups and new brands emerging. Almost all of them are assembled through contract assembly facilities owned by groups like DBS Indústria, which owns a 70,000-unit capacity assembly plant in Manaus.
Arguably, these are still early days, but there are new brands like Mileto and Watts that have started manufacturing in Brazil. Before we discuss them, we should have a good look at the TC/TS range of commuter motorcycles from Vmoto below. This is important.
Many of the new electric motorcycles in Brazil strongly resemble one of the above. None of the new players claims a joint venture with Vmoto (except battery swapper Vammo, which operates Vmoto scooters), but Chinese IP systems are befuddling.
For now, the local E2W players are assembling from kits and components imported from China. This is traditionally the first stage in any new market, where local brands start by locally assembling Chinese kits.
With brands like Watts and Mileto, Brazil seems to have also moved to the next stage. Now, the local players are at least partially designing and developing their own motorcycles, though the supply chain is still predominantly China-based.
Watts Motos
Watts Motos was formed in 2018 and launched a couple of years later. The company claims to have sold more than 3,000 motorcycles in the last three years.
Watts Motos was acquired by Grupo Multi (formerly known as Multilaser), a consumer goods giant with multiple production facilities in Brazil. The acquisition and further investment by Grupo Multi means that Watts now has a 200,000-capacity assembly plant in Manaus.
Watts currently has three motorcycles in its portfolio – W125, W160S, and the W-Trail.
The common thread in the three motorcycles is the use of portable batteries. In fact, most Brazilian motorcycles (barring the Auper sports motorcycle) favour the portable battery format.
Mileto
Mileto has one motorcycle model that also looks like a Vmoto. Like some of the other players, like Vammo, Mileto is also providing its motorcycles for rental.
Shineray
The Shineray group also owns SWM and has a wide range of ICE motorcycles. It also makes electric motorcycles at its assembly facility in Pernambuco near the coast. Here is the SHE-S, Shineray’s electric motorcycle offering:
Yadea’s Brazil Push
Perhaps the most significant move into the market has been from Yadea, which has started manufacturing electric scooters in Manaus. The world’s largest electric two-wheeler brand is manufacturing locally through a partnership with JBL (Jabil Industrial do Brasil Ltda). Brazil would only be the fourth country where Yadea is locally manufacturing, marking the importance of the market.
We continue with our series on Brazil with an intense conversation with YvY Capital, a Brazil-based fund with a focus on developing the electric mobility market and pushing decarbonisation.
