Brazil Motor Vehicle Sales Up 2.1% Compared With May 08
June 04 2009 - 1:33PM
Dow Jones News
Tax breaks and extended credit on car loans helped Brazil
register positive car sales in May, even beating May 2008 sales, a
time when the industry was on the cusp of a record breaking
year.
Brazil's motor vehicle sales rose 5.4% in May to 246,978
vehicles, the National Motor Vehicle Manufacturers Association, or
Anfavea, said Thursday. The number is also 2.1% greater than sales
in May 2008.
Brazil's all-important automotive industry entered crisis mode
last October, when it became clear that emerging markets like
Brazil would not decouple from the growing financial problems in
the U.S. and Europe.
The Brazilian government reacted by temporarily exempting car
makers from paying the IPI tax for industrial production, resulting
in as much as 7.5% off the sticker price of new vehicles.
In late April and May, major banks like Bradesco (BBD) increased
their credit terms out to 80 months from 60 months, enticing new
car buyers with lower monthly payments.
Production of motor vehicles is also on the upswing as demand
escalates, rising 6.7% in May to 270,247 units produced.
Even export sales managed to rise 4.5% to around $600 million,
according to Anfavea, following a long six month slump.
So far this year, Brazilian auto makers from General Motors (GM)
to Fiat (FIATY) have sold 1.15 million cars, down 0.1% from the
same period last year.
The number is impressive because at this time last year Brazil's
stock market had just rallied to historic highs of over 70,000
points and two major credit rating agencies - Fitch and Standard
& Poor's - had just given Brazil government debt investment
grade status.
"Given the realities of the market, it is amazing that we are
selling almost as much as we sold last year," General Motors do
Brasil Ltda. Chief Executive Jaime Ardila said Tuesday during a
press conference discussing the GM bankruptcy in Detroit.
General Motors is Brazil's third largest auto maker, selling
40,607 cars in May, up 18.2% on the month, but down 1.1% from May
2008.
Market leader Volkswagen sold 51,233 cars, up 6.1% from April
and up 19.6% from May of last year.
Fiat also had a good month, selling 3.6% more cars to 50,609
units. Sales for Fiat are also up 1.7% from this time last
year.
Ford Motor Company (F) sales dipped in May, however, selling
5.4% less to 17,778 units. Ford's sales are up 4.2% from May of
2008.
Overall, auto makers are returning to full capacity at many
assembly plans thanks to domestic demand. Exports remained a drag
on production figures, Anfavea said. January to May production
totals were 1.19 million, or 14.2% less than last year because of a
50.8% drop in exports. So far this year, Brazil exported around
$2.76 billion worth of automobiles.
Brazil is considered one of the most important markets for Fiat
and Volkswagen, and is GM's third largest market after the U.S. and
China.
-By Kenneth Rapoza, Dow Jones Newswires, 5511-8812-5961,
kenneth.rapoza@dowjones.com
(Rogerio Jelmayer of Dow Jones Newswires contributed.)