The best March sales ever (271,000 units) and best first quarter (668,000) demonstrate the success of temporary auto tax cuts by the federal government.
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Good results had been expected as buyers kept showrooms busy ahead of an expected ending of the incentive on 31 March.
An extension to 30 June was quietly agreed by government and the auto industry but kept secret as long as possible so as not to disrupt healthy showroom traffic – daily sales almost hit 20,000 vehicles and even truck and bus sales recovered healthily.
Exports, though, continued to slump. Although up 13% from February to March, they plummeted 52% year on year in the first quarter to 86,000 vehicles, CKD kits included.
Exports to the European Union were affected less, possibly due to German market incentives. Exports to neighbouring Argentina more than halved.
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By GlobalDataThe last minute frenzy in Brazil shrank inventories to just 17 days – between 25 and 30 days is deemed normal.
Early April sales suggest a settling after all the mad shopping in March. Production levels should be good since stocks need to be built up again.
The direct auto industry employment headcount of 107,000 remained virtually the same as March 2008 but was down 2% compared with late February.
There is an ongoing informal agreement with the government, effective from April, to keep labour levels steady during the tax exemption period.
Automakers association Anfavea has finally made its first projection for 2009 with the excise tax cut until 30 June in mind.
President Jackson Schneider rated it “realistic”: a 4% sales drop to 2.71m light and heavy vehicles (2008: 2.84m); production 11% lower at 2.86m units (versus 3.2m in 2008).
Production will be hit as exports fall 32% to just over 500,000 units corresponding to revenue off 39% to US$8.5bn.
Schneider told just-auto: “If this forecast is achieved, it will be one of the best auto industry results worldwide in 2009, perhaps running second only to China which is also bound to grow.”
Dealers association Fenabrave president Sérgio Reze still believes matching the record breaking 2008 sales or even seeing marginal domestic market growth this year should not be dismissed.
The Brazilian auto industry has room to breathe because there was a sharp decline in production raw materials and input pricing, inflation is below government targets and wage pressures are unlikely.
All these factors combined are likely to compensate for the reduced production due to fewer exports.
Fernando Calmon
