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Brazilian market growth below expectations

By Fernando Calmon | 23 July 2018

Anfavea is now sticking with its original January forecast: an increase of 11.7%, or 2.5m registrations, of light and heavy vehicles by the end of 2018

Anfavea is now sticking with its original January forecast: an increase of 11.7%, or 2.5m registrations, of light and heavy vehicles by the end of 2018

Vehicle production and sales in Brazil in the first half of 2018 were encouraging when compared to the same period a year ago but earlier forecasts for a stronger second half have been pegged back.

Anfavea, the local automakers' association, was cautious at the beginning of the year and it had been hoped a revision earlier this month would forecast better numbers.

However, the most acrimonious and longest truck drivers' strike ever (11 days in May) and current political turmoil ahead of general elections in October have eroded expectations of economic improvement.

As a result, the auto industry is now less optimistic, according to analysts.

Anfavea has consequently stuck with its original January forecast: an increase of 11.7%, or 2.5m registrations, of light and heavy vehicles by the end of 2018.

Vehicles registrations in June were about the same as in May but June volume grew 3.6% year on year to 195,000. In the first half, sales totaled 1.16m units, up 14.4% compared to 2017's 1.01m.

Inventory in the industry pipeline and at dealers climbed to 38 days, slightly above normal. But this was still in line with expectations for sales in July and August, usually the year's two best months.

For 2018 production, Anfavea expects an increase of 11.9%, topping 3.02m units, down on its previously forecast 13.2% rise.

June saw 256,300 units produced, a 20.7% increase versus May's 212,300, and up 21.1% on the 211,600 built in June 2017. In first half 2018, production reached 1.43m units, up 13.6% from 1.26m last year.

First half production was the highest since 2014.

Export expectation has also been cut and is now seen flat at the same 766,000 units as last year, rather than the earlier projected rise of 4.5%.

Economic troubles in Argentina and Mexico, Brazil's two largest markets, explain that.

Nonetheless, export sales last month rose 6.8% versus May - 64,900 units in June and 60,800 the preceding month - but fell 4.4% year on year.

Year to date shipments of 379,000 units were up 0.5% on H1 2017's 377,000.