Friday, June 6, 2014

Brazil: Auto Manufacturing Declines 18% in May 2014 Compared to the Same Month in 2013

According to The Latin American Tribune, automobile production in Brazil fell 18% in May 2014 compared to the same month in 2013, the Anfavea industry association said Thursday (June 6).

Output of cars, trucks and buses, however, grew 1.9% relative to April to 282,500 vehicles.

Auto production thus far this year has declined 13.3% from the first five months of 2013.

Although the number of vehicles sold last month – 316,233 units – was virtually unchanged from April, the sector has posted a 5.5% decline in new registrations this year compared to January-May 2013.

The drop in vehicle production is due to measures taken in February by the country’s leading automakers, including layoffs and shift reductions, to cope with lower demand, Anfavea says.

COMMENT: Employment in the sector is down 2.8% thus far in 2014 compared to the first five months of last year.

Brazil’s vehicle manufacturers are currently sitting with 48 days’ worth of inventory, well above the normal range of 23-32 days, Anfavea said.

Brazil’s auto sector is the largest in Latin America and No. 4 globally.

The sector is being hard hit by a drop in foreign sales – especially in Argentina, where higher credit costs for potential car buyers and an increase in electricity rates have been seen.

Four months prior to Brazil’s general election, automakers are hopeful that  the government of President Dilma Rousseff will reach a deal to lower Argentine import tariffs and extend tax breaks for domestic auto purchases, a program whose phase-out is due to be completed in July 2014.