Diminishing consumer confidence (resulting from a political crisis) and the continuing strengthening of Brazil’s currency against the US dollar affected vehicle sales last month.

According to Brazil’s National Association of Vehicle Manufacturers (Anfavea) production, domestic sales and exports all dropped in October.

Last month, 191,326 vehicles were produced, down 7.9% compared with the 207,692 units made in September. Year on year output grew 0.5% over the 190,302 vehicles produced in October 2004.

Local sales posted a smaller fall. In October, 137,710 locally-made and imported vehicles were sold in Brazil, a decrease of 4.6% compared with the 144,354 units sold the previous month. But the October result was 0.6% better than the 136,871 units sold in the same period of last year.

Fiat led the market with 27,138 cars sold, for a market share of 19.7%. Volkswagen overtook General Motors for second place with 27,020 (19.6%), while GM sold 26,974 (19.5%).

Combining cars, light commercials, trucks and bus chassis, Fiat also was top vehicle brand last month with 31,739 vehicles. VW sold 30,615 and GM 30,202. However, only Volkswagen markets a full range of vehicles in Brazil – Fiat and GM sell only cars and light commercials.

The strength of Brazilian currency – the real – is affecting exports of locally-made vehicles. Last month, 61,792 vehicles went to other countries, a fall of 16.6% compared with the 74,057 units exported in September. October also saw a decrease year on year of 1.7% compared with the 62,856 vehicles exported in the same period of 2004.

Year to date results still show strong growth, though. From January to October, local automakers produced 2,035,289 vehicles, up 11.8% compared with the 1,819,858 units built in the first 10 months of 2004.

Anfavea expects 2005 production volume to reach a record 2.4 million compared with 2.21 million last year.

Vehicle sales won’t set a new annual record though, in the first 10 months, 1,372,562 vehicles were sold, a rise of 8.8% compared with 1,262,003 units in the same period last year.

Automakers reckon full-year sales will reach 1.64 million.

Exports so far this year are up 29.3% to 685,088 vehicles, compared with 529,930 in the first 10 months of 2004.

Anfavea forecasts an export record of 780,000 vehicles for 2005.

The vehicle manufacturers’ association has yet to announce its forecast for 2006 and is waiting to see if government incentives will reverse the fall in domestic sales and exports over the last few months.

Some automaker CEOs expect an increase of 3% or 4% in production and domestic sales next year – but nobody want to predict export volume just yet.

Rogério Louro