Portugal - Country Commercial Guide
Automotive and Automotive Parts

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-10-02

Overview

Portugal’s economy is fully integrated into the European Union (EU). Fellow EU member states remain Portugal’s biggest trading partners and its largest investors. 

The automotive sector in Portugal consists of the 32,200 companies that manufacture automobiles and components, creates 152,000 direct jobs, and generates a business volume of 33.7 billion Euro, equivalent to 21% of the total fiscal revenues in Portugal.  This sector accounts for 11% of total exports from Portugal.  Portugal hosts over 220 automotive supplier companies and 4 major car manufacturers—Toyota/Salvador Caetano, PSA Peugeot Citroen, Mitsubishi Trucks and Volkswagen AutoEuropa. Interface and Industria 4.0 are two public programs with incentives to support innovation in the sector.

Automotive production is a major industry in Portugal, with national importance for employment and exports. Annual vehicle output surpassed 300,000 units for the first time in 2019, largely owing to the performance of the Volkswagen Group (Germany), which is the largest vehicle producer in Portugal.

Most cars manufactured in Portugal went abroad and exports accounted for 97.9%. Europe was the main destination, especially Germany (20.4%), France (16 .2%), Italy (11.7%), Spain (11.0%) and the United Kingdom (7.6%).

The automotive sector is a key performer in the Portuguese economy.  In recent years, it has become highly positioned as it plays an important role in the economy in terms of GDP.  The automotive sector is responsible for almost 8.5% of Portugal’s industry and 2.1% of the production of the Portuguese economy.  It employs 0.7% of the population and accounts for 4.8% of the manufacturing industry.  According to ACAP, the automotive sector in Portugal is responsible for 11% of total Portuguese exports.

According to ACAP, Stellantis (the automaker that emerged this year from the merger of France’s Groupe PSA and US-Italian Fiat Chrysler Automobiles) was the domestic market leader with a share of 30.5% in the first two months of 2021. Stellantis controls eight car brands in Portugal, including Peugeot, Citroën, Opel, and Fiat. Peugeot was already the leading brand in 2020.  In second place was the Volkswagen Group, accounting for 12% of Portugal’s car market, followed by Daimler (including Mercedes-Benz and Smart) with 11.5%. The share of Mercedes-Benz has jumped to 11.3% in January-February 2021 from 8.7% a year ago. The BMW Group (Germany) had a market share of 10.6% through its MINI and namesake brands, whereas Groupe Renault (France) accounted for 8.5% of the market.

The automotive components industry in Portugal has registered in 2020 an annual turnover of around 10.4 billion euros which represents 5.6% of the country’s GDP with a workforce of over 61,000 people in around 360 companies. It represents 8.8% of manufacturing industry employment and one of the main exporting sectors in Portugal with 16.1% of all tradable goods. About 85% of total automotive components produced in the country are exported.  The automotive components industry has grown 200% over the past 15 years and presently Portugal is supplying carmakers with batteries, glass, plastic molds, interiors, tires, metal works, cables and harnesses, car seats and electronics.

The Portuguese Molds Industry has been growing and consolidating its reputation in the international market, driven by external demand, integrated competences and capabilities, as innovative solutions, that offers to its clients. Nowadays, the molds sector has 536 small and medium enterprises, dedicated to the conception, development, and manufacture of molds and tools, employing about 11 200 workers. Portugal is among the world’s leading manufacturers of molds, particularly in the area of injection molds for plastics (8th worldwide, 3rd in Europe), currently exporting about 85% of total production. The automotive industry is the main client for the molds sector, representing 71% in 2020. Continuous technology update, development of new products are key opportunities for U.S. companies.

Pandemic Impact

Automobile production in Portugal fell 23.6% in 2020 with 264,236 vehicles manufactured in a pandemic year, according to the Automobile Association of Portugal (ACAP).  2020 also marked the end of the car production records of the previous two years: in 2019, 345 688 units were manufactured, with Autoeuropa and PSA Mangualde setting new highs; in 2018, 294 366 units left the assembly lines.

Exports of finished vehicles and parts in 2020 totaled €9.4bn, a drop of 22.5% compared with the previous year, according to data from the National Statistics Institute. Component exports alone totaled €5.3bn in 2020, lower by about 10% year on year. Quarantine measures forced the closure of automotive plants, cutting output last year.  New car sales declined 35% compared to 2019.

Market Entry

The most effective way to enter the Portuguese market is to partner with a local company that can act as a local representative as well as provide insights about the local market environment and trends.

Barriers

The mandatory European approval and certification process can be challenging for U.S. vehicles and parts when exporting to Portugal. There are no customs duties on imports from European Union (EU) countries. The VAT in Portugal is 23 percent. The VAT is applied to all imports, including European and local suppliers.

Current Market Trends and Demand

Motorcycles
U.S. motorcycles such as Harley-Davidson, Buell, Polaris /IPS are sold in Portugal.  Portuguese continue to look for other means of transportation such as scooters and motorcycles.

Electric Vehicles and Hybrid Vehicles

Zero emissions vehicles (ZEV) and hybrid vehicles continue to receive growing interest. These vehicles include Tesla, Toyota Prius, Honda Civic Hybrid, Lexus LS, GS and RX Hybrid, Segway among others. Portugal benefits from the first nationwide, fully interoperable electric mobility system, where any user can charge any vehicle at any of the more than 11950 charging points. An emerging cluster around new mobility concepts and services in Portugal is attracting. Portugal has adopted a welcoming attitude toward electric cars. Portugal is an ideal location for the manufacturing of zero-emission cars.

The Mobi.E Network, or National Electric Mobility Network, is a network of electric vehicle charging stations for universal access, interoperable and centered on the user. Currently, the network has more than 1.950 charging points nationwide, with more than 400 being fast or ultra-fast charging points, in other words, their power is higher than 22 kW.

In 2020 close to 35,000 new alternative-fuel vehicles (AFVs) were registered in Portugal, according to the European Automobile Manufacturers Association (ACEA). The pace of growth of new registrations slowed from 42.8% in 2019 to 38% last year, but the increase came from a high base and such vehicles accounted for 23% of all cars sold in 2020, compared with 10.8% in 2019. Of the total in 2020, 7,830 were battery electric vehicles (EVs), whereas sales of all chargeable vehicles (including plug-in hybrids) reached nearly 20,000 units, up by more than 55%. As in most of Europe, the Portuguese government unveiled a range of policy incentives in 2020, on top of previous measures, to promote a green recovery from the coronavirus.

The month of June 2021 is marked by the absolute record of monthly sales of 100% electric vehicles, with 1,360 100% electric vehicles (BEV - Battery Electric Vehicle) sold, which reveals a greater interest of buyers for fully electric vehicles to which there is also a larger and more diversified offer with vehicles with more autonomy, more efficient and covering all segments. The increase in sales of 100% electric vehicles (BEV) was 53% compared to May 2021, and 168% compared to the same month (June 2020 was heavily affected by the effects of the pandemic). These are numbers never recorded in pure electric vehicles, the 100% electric, which are increasing their sales, not only due to the greater offer, but also due to a much greater demand from increasingly well-informed citizens. The recovery of economic activities, badly shaken by the pandemic we are experiencing, also allowed an increase in sales of light passenger vehicles with internal combustion engines (VCI), but a much lower increase than that of electric vehicles (EV). While VCI sales grew 20%, EV sales grew 69.3% which represents a market share of 15.4%. Plug-in hybrid vehicles (PHEV – Plug-in Hybrid Electric Vehicle) also registered growth, in this case of 7.4% compared to May 2021 and 93% compared to the same month of the previous year.

Government benefits and incentives to the acquisition of 100% electric vehicles: 3.000 € Incentive for the acquisition or leasing of an electric, light passenger vehicle, until the limit of 700 vehicles, through the Environment Fund and 6.000 € Incentive for the acquisition or leasing of an electric, light goods vehicle, until the limit of 150 vehicles.

Aftermarket Accessories

The market for automotive accessories and specialty equipment in Portugal and distribution channels largely consist of small importers.  Although it is considered a small market when compared to neighboring Spain, it is an ideal market for product acceptance studies, serving as a gateway to enter other European markets as well as other Portuguese-speaking markets.

Acceptance of U.S. products and new technology in Portugal is very high and well received by local companies. Portuguese over the past years have become fans of a wide range of products such as, passive and active security systems, automotive eco-friendly solutions, diagnostic and testing tools, as well as car entertainment systems.

In general, all products with cutting-edge technology can be placed into the Portuguese market. As a rule, Portuguese are ready to take into consideration new products and pay extra money for something that is, or seems to be, new and innovative.

Smaller Engines

Europe’s best-selling car models can be equipped with 3-cylinder engines of 1000cc or less. This is the measure taken by brands to meet emission limits for pollution gases and to contain the production and sales costs of the latest cars, thus providing more technology while maintaining similar prices.

SUV

The SUV market grew 2,7% in 2018, corresponding to 24% of car sales in Europe. It is expected to continue to grow in the upcoming years, as the implementation of new technologies in these cars will make them even safer, more comfortable, and even more practical.

Gasoline engine VS Diesel engine

Diesel cars are losing market share. According to ACAP - Associação Automóvel de Portugal (Automobile Association of Portugal), of the 223,799 light passenger cars bought in 2019, 49.2% have a gasoline engine and 40% have a diesel engine. Despite that, the number of diesel engine commercial vehicles is still overwhelming: 99.1% of the 38,454 cars in this market are diesel and only 0.2% (90 vehicles) have a gasoline engine.

In alternative engines to fossil fuels, sales of electric and plug-in hybrids are also noteworthy. There was an increase of 3.3% in electric/gasoline hybrids to 8545 units and almost zero growth in electric/diesel hybrids (+0.3% for 883 cars sold). On other hand plug-in/gasoline grew 1.8% to 4653 cars bought; and plug-in/diesel grew 0.4% to 1145 units.  As a result, pure plug-in or hybrids, increased the market share to 8.5%.

Leading Sub-Sectors

This industry is divided into three main groups:

Motor vehicles for all purposes, including tractors; parts and accessories; and chassis, bodywork, trailers, and semi-trailers.

Main Competitors

U.S. exporters generally will face strong competition from European and Chinese suppliers but are well positioned as a supplier to the Portuguese automotive market.

Opportunities

Electric Drive Vehicles

The European Commission is proposing a reduction to zero of CO2 emissions from new cars sold in the bloc by 2035 in a plan that will effectively ban sales of cars with gasoline and diesel engines. The Portuguese supports the EC proposal, and the industry will have to be modernized and ready for the new market needs.

The European Commission approved a 20 billion euros ($22 billion), to offer consumers in the 27-nation bloc incentives to buy environmentally friendly passenger cars.

Mobility Applications

Applications such as Uber, Cabify or Taxify have occupied a solid place in the disruptive automotive market.  Portugal has embraced mobility apps and usage in the urban areas and the trend is towards the increase of this type of applications, especially for complementary transports such as electric scooters.

Batteries

The Batteries 2030 project, aiming for a lithium battery industry in Portugal and with investments of 8.3 million euros, was presented in July 2021. Of the 23 partners in this project, 14 are companies and nine are scientific entities, under the coordination of the INL – International Iberian Nanotechnology Laboratory. The project will work in 5 different areas: energy storage (particularly in the manufacture of new generation lithium batteries), hydrogen, second life battery cycle, decentralized energy production and energy management platform.

Resources

Automobile Association of Portugal (ACAP)

Portuguese Association of Automotive Suppliers (AFIA)

Automotive Cluster (MOBINOV)

European Union Mobility and Transport

The Observatory of Economic Complexity (OEC) – Portugal