Brazil’s auto industry saw a 15.6% jump in production to 984,000 vehicles from January to May this year in comparison to the same period in 2004, but serious problems are confronting the sector, according to the president of The National Motor Vehicle Manufacturers Association (ANFAVEA).
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“The national auto industry isn’t healthy; in fact, success is measured by investment flow,” said ANFAVEA president Rogelio Golfarb, noting that Brazil has difficulty attracting the necessary foreign investment these days, in part because of competition from other developing countries like China.
He also cited increased costs as a problem for Brazil’s auto industry and noted that the domestic market is sluggish this year.
ANFAVEA’s forecast this year is for the Brazilian market to reach 1.64 million autos and light commercial trucks – a drop from the 1.9 million vehicles sold in 1997.
Meanwhile, positive production results in the first 5 months of this year were spurred in large part by the sector’s export performance, said the president.
However, the valuation of the Brazilian real – which has gained over 10% of its value from the dollar this year – will start eating into export revenue, Golfarb warned, adding that the auto sector’s impressive export performance in the last few years was jump-started by the devaluation of the real starting in 1999.
