May saw an all-time vehicle production record here in Brazil: since 1 January, 1.54m units have rolled off assembly lines, a steep, 19%, year on year growth compared to last year’s 1.29m in the same timeframe.
This production gain reflected two factors. Firstly, a strong decline in full imports following the Inovar-Auto regime adding 30% to the IPI excise tax. Imports’ market share declined from 23.6% to 20.4%.
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Secondly, a recent devaluation of the Brazilian real boosted exports to almost 49,000 units last month, up 13.4% over May 2012.
Domestic sales also expanded 8.6% year to date to 1.48m from 1.36munits.
Domestic sales lagged early last year but settled at a higher level in the second half. It now looks like Anfavea’s forecast growth of 3.5% to 4.5% in 2013 will actually happen.
The auto industry lobby group’s president Luiz Moan Yabiku Junior maintains his expectation registrations will rise from 3.93m to 3.97m units, for a 10th consecutive year of growth.
As for output, the latest prediction for 2013 is 3.54m, 4.5% over 2012. Stand by for another record for a relatively young auto industry founded only in November 1956.
After hiring 543 people in May, the auto industry headcount is now 153,708 direct workers. That’s 8,700 more jobs than in May 2012, a sound 6% increase.
Without these solid auto industry numbers, Brazilian GNP growth in 2013 would be minimal. Forecasts at the end of last year was 3%. Following a recent Central Bank survey, it’s now more likely to be closer to 2.5%.
Even this small growth is not pain-free. Brazil can’t refine enough fuel from its oil refineries and [sugar cane] ethanol distilleries and must imported top-up to meet the country’s energy needs. There is no short term solution in sight.
