Brazil Automobile Production Down 3.6 Percent

By Michela DellaMonica, Contributing Reporter

RIO DE JANEIRO, BRAZIL — According to the National Association of Automobile Manufacturers (ANFAVEA), domestic manufacturing of vehicles decreased 3.6 percent in March with 271,200 vehicles produced, compared to 281,500 vehicles produced in February. This decrease was in all areas of production: cars, light commercial vehicles, trucks and buses.

Data sets from March 2013 and March 2014 show an overall decline in vehicle production in the previous year of 17.6 percent. In the first three months of this year, production slowed down to 8.4 percent with 789,800 vehicles produced in all.

In addition, the sale of new vehicles is down 7.6 percent, from 259,300 vehicles sold in February of this year to 240,800 sold in March. With the sales of vehicles in March 2013 compared to this year, the data from ANFAVEA shows a decrease of 15.2 percent.

However when looking at the first quarter, the figures are not as alarming. The total number of vehicles sold in the first three months of this 2014, 812,800, reveals a two percent decrease compared to last year’s sales during the same period.

Three factors explain the outcome of vehicle manufacturing in March, according to ANFAVEA president Luiz Moan Yabiku Junior. “We must remember that in 2013 we went through a time of expectation of increased IPI (Increased Production Taxes) in March, which ended up being postponed. Therefore, the tax price increased due to the rise of the IPI along with the introduction of airbags and brakes in smaller and lighter vehicles,” explains Moan. “Finally, we had two less working days because of the Carnival holiday.”

Automakers feel the effect of a downward trend within the domestic auto market along with falling exports. The ANFAVEA data also showed a decline in vehicle exports, which fell from 28,800 units in February this year to 23,400 in March, a decline of 18.8 percent.

In comparison to vehicle exports in March 2013, the difference fell 46.2 percent. A drastic change in numbers since a year ago, in December 2013 Brazil saw the highest number in automobile exports which were up 46 percent on the previous year.

A further fall in the total sales of imports in March fell 16.5 percent, compared to the import amount of 18.1 percent in February and 17.6 percent in March last year.

The sinking auto market has already been reflected in responses in production levels between automakers, including Mercedes-Benz, which identified over two thousand workers at its trucks and bus factory in São Bernardo do Campo in São Paolo with a program for voluntary dismissal or Programa de Demissão Voluntária (PDV).

Foreign sales on items such as agricultural machinery fell 15.3 percent in the first quarter of this year. In just March, exports fell 2.9 percent since February and plummeted 26.3 percent over the same month of March 2013, to US$990 million, according to ANFAVEA.

Earlier in March, Mr. Moan met with Brazil’s chief minister of finance, Guido Mantega, to discuss the potential of leasing vehicles. That meeting presumed that the possibility of vehicle leasing would come in three months, a promise that is still yet to be realized due to legal uncertainties.