Boosted by temporary government tax cut incentives, the Brazilian market saw all-time sales records in June.

Both the month and the first half posted record sales of 300,200 and 1.45m units, respectively. June growth was up 17% year on year and the half year rise was 3%.

There was unusually high dealer showroom traffic last month due to a general belief that incentives would end on 30 June but the federal government extended the vehicle excise tax cut for another quarter albeit warning it would be restored gradually during the final quarter.

Considering the good results, automaker trade group Anfavea revised its 2009 forecast and now thinks the year will close with domestic sales up 6.4% to 3m units of cars plus light and heavy commercial vehicles.

But it’s not so good on the export front where orders have slumped due to the world financial crisis.

Projections for the rest of this year suggest a 40% fall in the number of units to 440,000 and a 43% decrease in their value (to US$8.5bn).

The slow performance of foreign markets will require a 5% production cut to 3.05m units this year, affecting the number of direct jobs. Up to June, the industry’s job losses were a relatively low 4% to 109,000, better than forecast earlier.

Meanwhile, some factories catering for the domestic market are hiring again. These include the Volkswagen plant in São Bernardo do Campo in the Greater São Paulo area that has just hired 400 people, a number likely to rise to 1,000 by year’s end. Fiat, in Betim, state of Minas Gerais, is also considering hanging out the ‘help wanted’ signs again.

This need for more workers is in response to recent significant inventory reductions (at both dealers and factories) to just 18 days’ supply by the end of June, spurred by the fast pace of daily average sales.

Vehicle imports have made gains compared to exports. This year Brazil will export roughly 450,000 units and bring in 400,000.

Historically, the country’s auto industry exports twice what it imports.

Fernando Calmon