Industrial slump in Brazil: automakers’ worst sales in 17 years; lowest production in 2 1/2 years

RIO DE JANEIRO, BRAZIL – The Brazilian automotive industry is the largest in volume in all of Latin America. In January, Brazil produced 145,417 personal vehicles, commercial vehicles, trucks and buses, 27.4% less than in the same month in 2022, according to the National Association of Automotive Vehicle Manufacturers (ANFAVEA) on Monday, which partly attributed this decline to the Omicron variant.

Brazilian vehicle production fell by 55,000 units, from 200,398 vehicles manufactured in January 2021 to 145,417 in January 2022, ANFAVEA reported.

The number of vehicles Brazil produced in January was also down compared to the 210,925 rolled out of plants in December, representing a monthly plunge of 31.1%.

Manufacturing in January was the lowest for a month since June 2020 (98,400 units), when most plants were closed due to social distancing measures imposed to tackle the Covid-19 pandemic in its first months.

ANFAVEA attributed the sharp drop in production to a number of negative factors. It highlighted the rapid spread of the Omicron variant of Covid-19 in the country, causing a surge in cases and in the number of production plant personnel on medical leave.

“The employee absence rate caused by the Omicron variant in January rose to between 6% and 7%. This did not paralyze production, but with a high number of absent workers, the production rate decreased and output was lower,” said ANFAVEA chairman Luiz Carlos Moraes.

One of the most affected countries by Covid, with 632,000 deaths and 26.5 million cases, Brazil had managed to neutralize the growing spread of the pandemic in December, but the arrival of the Omicron caused the average number of daily cases to skyrocket.

Moraes said that all preventive measures are maintained and that vaccination is being encouraged, with 90% of workers having been fully immunized.

ANFAVEA also reported that new vehicle sales in Brazil were limited in January to 126,518 units, down 38.9% over December and 26.1% compared to the same month in 2021, dropping to its worst level for the month in 17 years.

In terms of exports, ANFAVEA reported that Brazil shipped 27,639 vehicles abroad in January, up 6.6% compared to the same month in 2021 and down 33.5% compared to December.

In terms of value, exports jumped 23% compared to January last year, to US$554.9 billion. Increased sales to Chile, Mexico, Uruguay and Colombia helped offset a drop in exports to Argentina.