The Brazilian auto sales tally for 2012 was quite close to industry lobby group Anfavea’s predictions, though some sectors were down slightly.

Domestic sales reached a record 3.8m units, up 4.6% year on year despite disappointing truck and bus sales.

But production fell for the first time in nine years – off 1.9% to 3.34m. That was due to a severe 20% drop in exports to 442,000 vehicles though the value slipped a lesser 9% to US$14.7bn thanks to increased shipments of components and spare parts.

Brazil last year lost its sixth-placed global production ranking to India but was fourth in sales. Climbing back up the production chart will be be far from an easy task.

What can be expected for the Brazilian automotive market in 2013? Expectations are it will grow and sales will set another record – the seventh consecutively since 2007. 

There is uncertainty, though over whether the magic 4m mark will be reached, let alone passed. The most optimistic 2013 forecast so far is 5% up on 2012 which would just breach the barrier.

Most estimates are in the 2% to 4% range while Anfavea reckons something between 3.5% and 4.5% – to 3.98m registrations.

One possible slowing factor is the rising pace of buyer loan defaults, up 5.6% in 2012, 2% above normal. This has resulted in interest rates falling more slowly.

The resumption of the temporarily suspended full IPI (consumption) tax will be staged through to the end of the first half, historically the leaner semester of the year. In 2012 the reduced IPI boosted sales by an estimated 400,000 vehicles.

Last year, there were about 40 major new model launches, imports included, about 20 genuine new models are expected this year.

More car prices are expected to rise due to newly compulsory safety equipment such as airbags and ABS (mandatory from 2014). The impact on prices may be softened by strong competition  – this is the first full year for new players in the market with new plants including Hyundai (HB20 hatchback) and Toyota (Etios). Longer established rivals like Renault and PSA Peugeot Citroën will have refurbished plants pushing out more cars and also hungry for corresponding higher sales.

General Motors will have its first full year with an almost completely renewed model line (barring only the Celta and Classic) and the new Onyx saloon is on its way. Ford, besides redesigned EcoSport and Ranger models now at full pace, will launch new Fiesta and Fusion lines.

Fiat and Volkswagen will probably feel a jolt because no really new models are due until 2014.

Expanded production capacity may give buyers a break, though, as efficiency improvements help keep price rises down to the 5% estimated for 2013.

The market will be re-divided among old and new players and the four veteran makes will keep losing market share to newcomers like Hyundai, Toyota and the recently arrived Chinese.

To compete, automakers will either lower prices or, as was more common last year, add additional equipment as standard.

Anfavea estimates total vehicle production will grow 4.5% this year, helped somewhat helped by recovering demand for trucks and buses.

Exports remain a worry – the forecast is another 5% slump in 2013.

Brazil’s export markets are still very fragile, and our high production costs plus a currency exchange rate that currently helps importers rather than exporters aren’t helping much as we move into a new year.