Brazilian auto parts supplier Autometal is looking for acquisitions as global car manufacturers like BMW and Audi are planning domestic production, according to a report on Bloomberg. Autometal Chief Financial Officer Fernando Mearim said his firm is looking at possible takeovers in eight to ten competitors who are not equipped with the expertise at working together with premium brands. These midsized rivals were supposedly not able to meet demand profitably even as auto output in Brazil has increased to record levels this year, said the report.

In a December 5 seminar with executives in the car manufacturing and parts making industries held in Sao Paulo, Mearim said, "Not all companies will continue operating in this market. The pie is staying the same size, it's just going to be divided into smaller pieces."

According to the report, local suppliers are feeling the strain with the rush of companies like Daimler and China-based Chery Automobile to Brazil. Mearim said smaller partsmakers are having a difficult time keeping up with the technical demands of manufacturers and have become the targets for acquisitions. Data gathered by Bloomberg showed that despite the slowdown in domestic sales this year, the market has grown from 2002 to 2012 at an average pace of 10% annually.

Of the close to 700 auto parts companies in Brazil, Mearim did not disclose his company's possible targets. He did say, however, that he was not interested in anything less than BRL20 million.

According to the report, the Brazilian auto parts market is ripe for consolidation. Fator Corretora analyst Gustavo Perez told Bloomberg by phone, "Many of them aren't efficient in terms of cost control and management. There is a movement towards consolidation." He added that some smaller suppliers will not be able to survive the slowdown in the industry this year. Citing data from automaker trade group Anfavea, the report vehicle sales in Brazil plunged 2.8% in November as compared to the year before. Sales also fell 0.8% in the first 11 months of this year, the report added.