Vehicle production in Brazil rose 3% in March although sales were still behind compared to the same month a year ago despite an extension to government tax breaks on new cars and trucks through the end of the year.
The move by the government came amid fears that weak demand could hurt the vehicle sector which makes up a quarter of Brazil’s industrial output.
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However, economists have questioned whether the tax incentives are providing any real economic stimulus or simply delaying an inevitable slowdown in vehicle sales which had doubled in six years to become the world’s fourth largest market.
Brazil’s economy grew just under 1% last year, hit by uncompetitive industry, transportation bottlenecks and growing consumer debt.
