The new IPI (excise tax) break, discounting by automakers and flexible bank financing combined to make last month the best June ever for car sales here in Brazil.
At an average 17,000 daily pace, sales topped 353,000 units overall (heavy commercials included), the third best month in history. Part of this result was attributed to sales that spilled over from May following the IPI tax break announcement.
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Since total H1 sales were 1.2% below 2011’s, there should be an average 10% surge over last year’s H2 to level 2012 with 2011, according to a forecast by national dealer association of domestic and foreign brands, Fenabrave. It predicts full year 2012 sales 0.2% below 2011.
Automaker association Anfavea did not revise down its 4 to 5% growth forecast for 2012, saying data was insufficient. The lower pricing will last until 31 August but it is widely expected the tax break will be extended to the end of the year.
Most recent consultancy forecasts for this year’s GDP growth call for 2%. The government believes in an economy turnaround in the second half and the auto industry will surely help prop up the numbers.
As if to play safe, the government has just announced a US$4bn budget allowance in H2 for the purchasing of lorries, buses and light commercials for the three administration tiers (federal, state and municipal).
These segments are well below cars’ (-15.1%, -9.1%, and -2.9%, respectively) and mirror more than just the economy downturn. The implementation of low-sulphur diesel fuel and the introduction of engines to meet environmental mandate Euro 5 from 1 January this year caused mammoth forward buying in 2011. Also the slow distribution of the new fuel has scared pick-up and medium-size van buyers.
The most positive indicator, the consumer confidence index, jumped from 113.9 to 120 points (optimism is supposed above 100). Total inventories (OEMs plus outlets) have dropped sharply also: from 43 days in May to 29 days in June.
And employment kept rising – 1,949 new jobs – thanks especially to new Hyundai (150,000/yr capacity) and Toyota (80,000/yr) manufacturing sites to open in the next three months.
