Brazils auto industry added 1,010 jobs between February and March alone

Brazil's auto industry added 1,010 jobs between February and March alone

Brazil's automotive sector set new records in the first quarter of 2011. Sales of cars plus light and heavy commercials topped 852,200 vehicles – 4.7% more than in Q1 2010 – and production rose 7.9% to 902,100.

Other indicators are positive as well. Compared with a year ago, finance defaults dropped from 4.2% to just 2.8% and the consumer confidence index (calculated by the FGV foundation) climbed to 123 points from 111.

Employment in the industry has also gone up. From February to March this year 1,010 more workers were hired. The current workforce is 120,580 people distributed over 16 automakers, not including agricultural machinery producers (which are also members of Anfavea, the sector's national association).

Nonethless, a degree of market levelling-off has already been noted. Use the more accurate comparison of total average work days, when seasonal effects like the Mardi Gras holidays are taken into account, and annual sales growth in the first quarter was just 1.5% and production 3.5% up.

Total, monthly, factory and dealer inventories in March were at the upper end of the 25 and 30 days regarded as normal here, however.

In an attempt to control inflation by discouraging internal demand, the Ministry of Finance boosted financial operations tax (IOF), which covers all kinds of financing, from 1% to 3%.

However, that adds just a few reais to the monthly car payment and the impact on consumer behaviour is thought to be more psychological than real. Yet basic interest rates (Selic prime rate) are expected to continue rising until the end of the year and aqre likely to have a stronger effect on monthly instalments - and on demand for new vehicles – than the tax hike.

Anfavea is keeping to its forecast of a 5% year on year rise in sales for 2011.

“The market is not growing at the same pace as last year’s, but will at least align with the expected GNP increase for this year,” president Cledorvino Belini told just-auto.

Belini has joined a business group accompanying Brazilian president Dilma Rousseff on a diplomatic and commercial mission to China this month.

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