Beset by high-profile kidnappings, Brazil's security-minded business executives are generating a booming demand for armored cars.
Brazilian companies armor 2,500 to 3,000 cars per year, with 90 percent of the business generated in Sao Paulo. Rio de Janeiro, with a less affluent upper class but growing drug-related crime, generates most of the remaining business.
Industry officials say Brazil's armored car sales are growing more than 30 percent per year. And that has triggered a rapid expansion for companies that retrofit cars with armor plating.
For example, Latin American sales for O'Gara-Hess & Eisenhardt of Fairfield, Ohio, have risen more than 700 percent over the past three years. O'Gara-Hess armored 1,400 cars worldwide last year. About 35 percent of its business comes from its armoring plants in Sao Paulo, Mexico City and Bogota, Colombia.
'The crime situation in certain cities has become more serious and very violent,' said Dan Heimbrock, the company's marketing director. 'Wealthy citizens and corporations are electing to remove that vulnerability that they have on the street.'
Brazil's five largest armored-car companies, which account for 80 percent of the market, are in or near Sao Paulo. These include two U.S. companies - O'Gara-Hess and International Armoring Corp. of Salt Lake City, Utah. They compete with three Brazilian companies, Imbra Blindados, Armor Blindados and G5 Blindagens Especiais Ldta.
Imbra armors 95 cars per month, while the others armor 35 to 45 cars per month. Depending on the level of protection, most retrofits cost $17,000 to $90,000. (See box above.)
Another 30 companies have sprung up in recent years to capture the bottom of the market by undercutting the top companies' prices. BMW and Mercedes-Benz also offer factory-installed armor.
The top five companies fully armor customers' cars. They glue or bolt bulletproof material to inside panels, install bulletproof glass, and add plastic inserts to the tires so they won't go completely flat when shot. The finished vehicles appear the same as nonarmored versions.
Heimbrock of O'Gara says prices have fallen significantly, drawing many more customers. 'In light-armored vehicles, prices are down maybe one-half in the last five years,' he said. O'Gara has cut prices by limiting the variety of vehicle models it will retrofit. That allows bulk material purchases and standardized assembly.
Sao Paulo's growth of armored vehicle sales likely will be duplicated elsewhere, Heimbrock says. The company sees rising demand elsewhere in Latin America.
'In the past eight months, the amount of calls and sales activity coming out of Buenos Aires has just skyrocketed. We've established a sales office, and we're thinking about production facilities,' he said.
Meanwhile, sales of armored vehicles in the United States are moving beyond the traditional clientele of celebrities, chief executives and politicians, he says. According to a recent article in the San Jose, California, Mercury News, newly wealthy Silicon Valley entrepreneurs are buying armored cars. Although Americans have been lulled by prosperity and declining crime rates, Heimbrock said, 'there are still plenty of bad guys out there' who will target business executives whose wealth is publicized.
In Brazil, more than 80 percent of the business is aimed at executives who want to protect themselves against stoplight robberies. In this type of encounter - called Level 3 - thieves are not likely to carry a weapon more powerful than a .44 Magnum. Those who opt for Level 5 protection usually want to protect themselves against kidnapping. They often armor a trailing backup car for security guards as well.
'I'd say that nearly 90 percent of our clients are worried about traffic-light holdups, in other words, being at the wrong place at the wrong time,' said Franco Giaffone, the 30-year-old CEO of G5, who drives an armored Jeep Grand Cherokee sport-utility. 'Because of the increasing amount of poverty and drugs here, being at the wrong place at the wrong time can be fatal.'
The majority of these companies' customers consists of multinational and major Brazilian companies outfitting their fleet of executives' cars and the private cars of top executives. Lawyers, doctors and people from the entertainment world make up the rest.
Giaffone says that much of his increased business comes from executives who are armoring the cars of their wives and children.
'Five years ago, a G5 customer had one car armored. Today, because crime has gone way up, the average G5 customer has three to four cars armored, mainly for other family members.'
GM, VW lead
The cars most often armored are sedans made by General Motors and Volks-wagen. The GM Omega and Vectra and the VW Passat are among the most-armored cars.
'The Passat and Omega, in particular, offer close to the security, manageability and comfort of a slightly higher-priced Mercedes, BMW and Audi, but attract less attention on the streets, and are thus less likely to be targeted,' said Pedro Paulo Martins, the commercial director of International Armory do Brazil, who drives an armored Vectra. 'That's why they're the cars we most armor.'
Other frequently armored vehicles include Jeeps, Volvos, Mercedes-Benzes, Audis and BMWs.
Last year, of the 600 cars that O'Gara armored here, five came back with bullet holes. Of the more than 900 cars that G5 has armored since setting up shop five years ago, 14 came back with bullet holes.
Those incidents often create return business. Armor's marketing director, Luiz Trivelatto, says 30 percent of the cars his firm armors are for those who fear kidnappings, or who have been kidnapped once.
Recently, a chauffeur was taking the three children of a Sao Paulo businessman, whose car Armor had fitted, to school when kidnappers forced the car to stop. The driver told the kidnappers, over a megaphone, that the car was armored and turned on a siren. The kidnappers opened fire, then fled. After the attack, the businessman returned to Armor and asked the company to armor all 10 of his cars.
Additional reporting by Dave Guilford