Last month’s (August 2012) exceptional sales (an absolute record of 420,000 units, lorries and buses included) partly arose from the restrained demand since April when rumours that IPI excise tax would be slashed first spread. If the market was already sluggish, it only worsened then.
These fiscal manoeuvres work better here because Brazil suffers from the heaviest fiscal burden on vehicles in the world. In fact, the union loses some direct income yet state and municipal administrations, in contrast, are the winners.
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However, production of an all-time record of 329,000 units rose a mere 1% year on year and year to date output was down 7%.
This is far from a good sign for it shows that low exports have stopped generating new jobs. Currently, less than 15% of production goes overseas, against the ideal 25% at least (it had been 30% back in 2005).
A good portion of the current lack of competitiveness is due to a revalued real. Yet, only now are very high production costs being addressed by infrastructure expansion and lower taxes on electric power. The fiscal burden on labour had been slightly reduced earlier.
What will happen in 2013 remains unknown. Will anticipated new vehicle shopping this year affect next year?
Generally, essential fleet renewal sparks things up overseas. It’s the same here but now the lorry market has collapsed after 2011’s Euro 3 purchase anticipation effect ahead of the new, Euro 5 engines that hiked lorries’ prices by up to 15%.
Optimists believe GDP growth next year will bring sustainability to the market.Some growth is expected but how much is still unpredictable.
