When automakers map their strategies for Brazil’s automotive market, they overwhelmingly reach for the same conceptual toolkit: income deciles, household purchasing power, socioeconomic classes labeled A through E. This framework, developed in mid-twentieth-century Brazil during an era of structured industrialization and mass formal employment, retains an iron grip on how product planners, marketing directors, and distribution strategists think about the Brazilian consumer. The problem is that the Brazil these models were designed to describe has been substantially transformed. Roughly 38 percent of the country’s active workforce today operates outside formal employment arrangements, according to data from the International Labour Organization. Nearly 30 percent of all economic activity flows through what official statistics awkwardly call the “informal sector.” And yet, automotive segmentation models largely continue to behave as if income is stable, predictable, and properly documented — as if the 28.9 million self-employed Brazilians counted by the Instituto Brasileiro de Geografia e Estatística in 2024 fit neatly into the same behavioral boxes as salaried workers with payslips and credit histories. They do not. The result is a systematic misreading of one of the largest and most dynamic automotive markets in Latin America, with consequences that range from flawed product positioning to misallocated marketing budgets and missed commercial opportunities of striking scale.

The Arithmetic of Informality

Brazil’s informal economy is not a footnote to its economic structure. It is central to it. Approximately 30 percent of the country’s GDP is estimated to originate outside the formal sector — a proportion that has remained stubbornly entrenched despite decades of policy efforts aimed at formalization. The country’s active workforce numbers close to 100 million people; of those, around 38 percent hold no formal employment contract, a figure that has barely moved since the early 2010s, when a commodity-driven boom briefly accelerated job formalization. The pandemic years of 2020 and 2021 rolled back much of that progress, and while aggregate unemployment has fallen to near-record lows — reaching 6.2 percent by early 2025, according to McKinsey’s consumer research — the quality of that employment tells a more complicated story. Low unemployment coexists with widespread informality, which means that millions of Brazilians who appear “employed” in the headline statistics are actually navigating income streams that are irregular, seasonally volatile, and largely invisible to the credit scoring systems that automotive financing depends upon.

Among the most consequential developments of recent years has been the institutionalization of a semi-formal intermediate category of workers known as MEIs — Microempreendedores Individuais. By 2024, Brazil counted 15.7 million MEI registrations, with 13.2 million considered active. These are individuals who have formalized their self-employment through a simplified federal registration system that grants them a CNPJ (a business tax identification number), access to basic social security, and, critically, the capacity to issue tax invoices. They span a wide range of activities: 41 percent work in services, 32 percent in commerce, 18 percent in small-scale manufacturing, and 9 percent in transportation. The MEI framework has functioned as a bridge between informality and the formal economy — but only a partial one. MEI income ceilings were capped at R$81,000 per year in 2025 for most activities, placing the majority of registered MEIs in an income band that standard automotive segmentation would slot firmly into Class C or D. The reality on the ground is far more heterogeneous: some MEIs are highly skilled tradespeople or service professionals earning considerably more than their declared income, while others are intermittent workers with irregular monthly cash flows that would make any conventional lender blanch.

Why Income Class Is the Wrong Unit of Analysis

The A-to-E classification system that dominates Brazilian consumer research has genuine utility at a macro level. It correctly identifies that Class C — broadly defined as households earning between roughly R$2,000 and R$8,000 per month — constitutes the country’s largest consumer segment, representing close to 90 million people and generating consumer demand on a scale that drove Brazil’s expansion in the 2000s. Automotive market analyses have rightly noted that entry-level vehicles, particularly compact hatchbacks and the increasingly popular entry-level SUV formats, draw their volume precisely from this middle segment. What income class fails to capture, however, is the behavioral and financial architecture that determines how Class C consumers actually navigate large-ticket purchases — and it is here that the distinction between formal and informal workers becomes decisive.

For a formally employed worker, the pathway to car ownership follows a relatively legible sequence: a payslip generates a credit score, a credit score unlocks financing, financing is structured over 48 or 60 months, and the monthly installment is calculated against a documented salary. Brazilian banks and vehicle financing arms are competent at this chain. The problem is that for informal workers — including MEIs, unregistered self-employed individuals, gig economy workers, and those who cycle between formal and informal employment, which Brazilian data shows happens with surprising frequency — the chain breaks at multiple points. Informal workers, as research from the Universidade Federal demonstrates, face significantly more volatile earnings than their formal counterparts. Monthly income for a delivery driver or a freelance electrician is not a stable curve but a jagged sequence of better and worse weeks, subject to seasonal demand, platform algorithm changes, health disruptions, and economic fluctuations that affect discretionary spending. This volatility creates a consumer profile that does not respond to automotive marketing the way income class alone would predict.

The Gig Economy Vehicle Paradox

Nowhere is the inadequacy of traditional segmentation more visible than in the gig economy, which has become one of the most structurally important sources of vehicle demand in Brazil — and one of the most poorly understood. When Uber arrived in Brazil in 2014, it transformed not only urban transportation but also the calculus of vehicle ownership for millions of low- and middle-income Brazilians. The vehicle, for an Uber driver or an iFood delivery worker, ceases to be a consumption good and becomes a means of production. This flips virtually every conventional assumption in automotive marketing: reliability and running costs displace aspirational brand value; total cost of ownership becomes more important than purchase price; access to parts and a dense network of affordable mechanics outweighs the prestige of a dealer network. Brazilian rideshare platforms now operate across over 100 cities with a combined driver base that exceeds 50,000 in Uber’s network alone, and that figure captures only a fraction of the gig economy workers who depend on motorized vehicles — motorcycles often competing directly with entry-level cars in this space.

The automotive industry has been slow to respond to this demand shift with coherent product or financing strategies. Gig economy workers who need a vehicle for income generation face a profound contradiction: the vehicle purchase itself is often preconditioned on demonstrating the income that the vehicle would generate. Without a formal salary, accessing automotive financing at Brazil’s characteristically high interest rates — the Selic rate has been used aggressively as an inflation-fighting tool, pushing borrowing costs to levels that significantly increase the monthly burden of a vehicle loan — is disproportionately difficult. Some gig workers have navigated this through informal arrangements: purchasing used vehicles outright with accumulated cash savings, borrowing from family networks, or acquiring vehicles through informal installment schemes that operate entirely outside the banking system. None of these pathways are captured in standard market research.

A Market Hiding in Plain Sight

Brazil’s used vehicle market offers the clearest evidence that a large and financially active consumer segment is being systematically misread. According to data cited by Frost & Sullivan, close to 59 percent of used car sales in Brazil involve vehicles more than nine years old. This concentration of demand in older, cheaper vehicles is typically interpreted as a function of affordability constraint — which it partly is. But it is also a function of rational asset management by informal economy workers. An older vehicle, purchased outright without financing, carries no interest burden, minimal depreciation risk relative to purchase price, and lower IPVA (the annual vehicle property tax). For a gig economy worker or a self-employed tradesperson whose monthly income is variable, the freedom from a fixed monthly installment commitment is not merely a financial preference but an economic survival strategy. The “market” for nine-year-old hatchbacks, in other words, is not a poverty segment — it is a rational economic decision by a consumer cohort that traditional segmentation has mislabeled as simply “Class D.”

This misclassification has real commercial consequences. Automakers and their dealer networks that design their used vehicle programs, certified pre-owned offerings, and entry-level financing products around formally employed consumers are structurally excluding a consumer group with genuine purchasing power and, in many cases, genuine income. A self-employed electrical contractor in São Paulo or Belo Horizonte may earn considerably more than a formally employed administrative assistant — but the contractor’s income is irregular, underdeclared, and constituted in cash flows that do not generate the credit trail that conventional financing requires. This creates a paradox where actual purchasing capacity exceeds apparent creditworthiness, and where the automotive market leaves accessible demand on the table.

Volatility as a Design Principle

The analytical shift required to correctly engage Brazil’s informal economy is not merely a matter of adjusting income thresholds or creating a new demographic bucket. It requires a fundamentally different understanding of what “consumer readiness” means in an economy characterized by earnings volatility. Academic research using Brazilian panel data from the IBGE’s continuous household survey confirms that formal and informal workers face dramatically different earnings risk profiles: informal workers experience more frequent and larger earnings shocks — in both directions — than their formal counterparts. This means that the purchasing window for an informal worker is often compressed and unpredictable: a good quarter of business generates the cash to make a vehicle purchase that might have been impossible six months earlier and might not be possible six months later.

Automotive marketing that relies on month-long campaign cycles, slow-burn brand messaging, and financing proposals predicated on stable monthly cash flows is poorly calibrated for this behavioral reality. The informal consumer who is ready to buy a vehicle may be ready now — and not amenable to the deliberative 90-day consideration cycle that characterizes the formal middle-class purchase journey. Conversely, the same consumer who is not financially ready today may become ready quickly, without passing through any of the formal indicators — inquiries at dealerships, credit pre-qualification attempts, or digital browsing patterns tied to personal credit activity — that brands typically use to identify “in-market” consumers.

The MEI Consumer as a Distinct Segment

Among the sub-segments within the broader informal economy, MEI workers deserve particular strategic attention because they represent, paradoxically, the most accessible and least served group for automotive product strategy. With 13.2 million active MEIs in 2024, growing at roughly 12 percent annually since 2020, this group has achieved a degree of economic formalization that distinguishes them from fully informal workers. They have CNPJs. Many have business bank accounts. They can, in principle, access credit in ways that a purely informal worker cannot. And critically, their vehicle needs are often tied directly to their business activity: a MEI working in transportation, delivery, or field services treats the vehicle as a business asset with distinct depreciation logic, tax implications, and maintenance considerations.

Yet automotive brands and their dealer networks have not developed coherent product or communication strategies targeting MEIs as a distinct segment. The MEI’s dual identity — simultaneously a consumer and a small business operator — does not map cleanly onto either personal vehicle marketing (which speaks to lifestyle aspirations and family utility) or commercial vehicle marketing (which speaks to fleet managers and logistics operators). This gap represents a significant and largely unaddressed commercial opportunity. MEI-specific financing products that account for variable income documented through DAS-MEI payment histories rather than traditional payslips, MEI-oriented after-sales packages focused on reliability and vehicle uptime rather than prestige service experiences, and communication strategies that address the vehicle as a productive asset rather than a lifestyle marker — these are the kinds of differentiated approaches that the market has yet to consistently develop.

Credit Infrastructure and the Financing Gap

The financing architecture available in Brazil’s automotive market is, structurally, one of the most significant barriers to capturing informal economy demand. Interest rates in Brazil have historically been among the highest in the world for consumer credit, and while the Selic rate has been an instrument of macroeconomic management rather than deliberate policy aimed at the automotive sector, its effects on vehicle financing are direct and severe. High base rates translate into monthly installment burdens that, for borderline-qualified borrowers, push new vehicle purchases beyond reach. For informal consumers whose income documentation is partial, this problem is compounded: lenders who might be willing to extend credit at standard rates become unwilling when income cannot be fully verified, creating a demand destruction dynamic that affects the market at the bottom half of the income distribution.

Brazil’s PIX instant payment system, launched in late 2020 and now ubiquitous, has created an unexpected data asset that has not yet been fully leveraged by automotive financing. PIX transaction histories document the cash flows of millions of informal and self-employed workers in ways that formal payslips never could. A MEI who receives R$3,000 to R$5,000 per month through PIX payments from multiple clients has an auditable income record — not formatted in the way credit scoring systems were designed to process, but available nonetheless. Fintech lenders and some forward-looking automotive financing arms have begun exploring alternative credit scoring models that incorporate PIX histories, banking transaction records, and platform earning data from gig work applications. This is nascent, but it represents the germinal stage of a credit infrastructure transformation that could unlock substantial new demand within the informal economy consumer base.

Regional Dimension: Informality Is Not Uniform

A further complication for automotive segmentation is that Brazil’s informal economy is geographically distributed in ways that do not align with the market’s traditional concentration on São Paulo, Rio de Janeiro, and the southern states. World Bank research has noted that the north and northeast regions carry the highest informal employment rates and, relatedly, the lowest rates of vehicle ownership — but also some of the fastest-growing consumer bases as incomes rise from low bases. The northeast’s share of middle-class and affluent households was projected to increase significantly through the 2020s, and the informal economy’s role in that region is more dominant than in the industrialized south. A retail and distribution strategy built around the formal consumer clusters of São Paulo’s ABC industrial region or the middle-class suburbs of Curitiba systematically underweights demand that is emerging in cities like Fortaleza, Recife, and Manaus — where vehicles, and particularly motorcycles, play an outsized role in enabling informal economic activity.

This regional dimension of informal economy consumption is partly why the motorcycle segment in Brazil behaves so differently from automotive passenger vehicles. For lower-income self-employed workers, particularly those engaged in delivery, small-scale commerce, and agricultural support in peri-urban and rural areas, motorcycles function as the primary vehicle of economic mobility in both the literal and metaphorical sense. Understanding the dynamics between motorcycle and entry-level passenger vehicle demand within the informal economy context requires disaggregated regional analysis that few brands have systematically undertaken.

What Automotive Intelligence Must Evolve to Capture

The conceptual infrastructure of consumer segmentation for the Brazilian automotive market needs a material update. The income class framework should be supplemented with behavioral and structural dimensions that reflect the economic realities of 2024 and 2025, not 1975. Employment formality status, income volatility profiles, vehicle use-case orientation (personal mobility vs. economic tool), credit accessibility, and geographic positioning relative to informal economic clusters are all variables that carry significant predictive power for automotive purchase behavior — and none of them are adequately captured by a simple A-to-E classification.

CSM International’s automotive research and customer research work in Brazil and broader Latin America has consistently encountered this gap between how automakers segment their markets and how informal economy consumers actually make vehicle acquisition decisions. The data infrastructure exists to build more granular consumer intelligence: Brazil’s rich statistical apparatus, including IBGE’s continuous household surveys, PIX transaction data, MEI registration records, and platform economy operational data, collectively offers raw material for a next-generation segmentation model that reflects the country as it actually is. The challenge is less analytical than organizational: it requires automotive brands and their research partners to move beyond the comfortable, legacy frameworks that appear rigorous but systematically misrepresent a consumer majority.

Vehicle Sales Growth and the Demand It Conceals

The aggregate health of Brazil’s automotive market makes it tempting to conclude that current segmentation frameworks must be adequate — after all, vehicle sales grew 13.9 percent year-on-year in 2024, reaching close to 2.65 million units and approaching pre-pandemic levels. The market’s overall trajectory is unambiguously positive. Brazil’s automotive industry was valued at over $81 billion in 2024 by Market Research Future, with a projected compound annual growth rate of 6 percent through 2035. Yet aggregate growth metrics can mask distributional distortions. If the informal economy segment — which, given its size, must account for a significant proportion of used vehicle transactions and a non-trivial share of new entry-level sales — is being engaged through strategies designed for a different consumer profile, then the market is growing despite imperfect consumer intelligence rather than because of it. The latent demand that remains unaddressed by existing product, financing, and communication strategies represents an opportunity that correct segmentation could unlock incrementally.

This matters particularly as Chinese automakers reshape the competitive landscape. The entry of Chinese brands offering competitively priced electric and hybrid vehicles, supported by local production facilities, introduces a new variable into the Brazilian market’s competitive dynamics. These brands, less encumbered by legacy segmentation orthodoxies and in some cases actively studying the informal economy consumer through alternative data approaches, may prove more agile at capturing demand in the transitional segments of the market — precisely where formal and informal consumers overlap in complex and commercially important ways.

Toward a Consumer Segmentation Fit for a Dual Economy

Brazil has never been a single-speed economy, and the automotive market that reflects it cannot be understood through a single-speed segmentation model. The country’s informal economy is not a temporary aberration awaiting formalization — it is a structural feature that has persisted across commodity booms, recessions, social programs, and labor market reforms. Approximately 38 percent of the workforce operating without formal contracts, combined with 28.9 million self-employed individuals and 13.2 million active MEIs, constitutes a consumer mass too large and too economically significant to be treated as a residual category.

The competitive advantage in Brazil’s automotive market over the next decade will not accrue to the brand with the most attractive product or the most aspirational advertising. It will accrue to the brand — or the research partnership — that most accurately understands who is actually buying vehicles, how those purchasing decisions are made, on what financial logic they rest, and through what commercial channels they can be efficiently reached. That understanding requires a willingness to invest in consumer intelligence that goes beyond conventional income segmentation: into employment structure, earnings volatility, MEI registration patterns, PIX-documented cash flows, gig economy vehicle use cases, and regional informal economic clusters. The work of building that intelligence is the kind of competitive research that CSM International’s competitive research and content analysis capabilities are specifically designed to support — and it is work the market, on the evidence of current practice, still largely has yet to undertake.

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CSM International is a market research consultancy specializing in automotive research, motorcycle research, customer research, product research, content analysis, and competitive research. For more information, visit csm-research.com.