The Brazilian auto makers produced and sold record volume of new vehicles in H1 2008 with flex-fuel motors on the top, says Anfavea.
According to Associação Nacional dos Fabricantes de Veículos Automotores (Anfavea), the association of auto manufacturers, the Brazilian auto makers manufactured and sold a record number of new automobiles in the initial six months of the year, with flex-fuel cars on the top, as REUTERS reported.
Anfavea said that new car production reached about 1.68 Million units in H1 2008, an increase of nearly 21.3% over the same period last year. Output in June 2008 reached around 303,800 units, a rise of about 4.8% and 23% as compared to May 2008 and June 2007 respectively. The domestic auto sales grew by about 30% over H1 2007 to reach 1.41 Million, while domestic auto sales reached around 256,000 in June 2008, an increase of nearly 5.8% and 28.8% over May 2008 and June 2007 respectively.
The rising disposable income of the Brazilian middle class and poor is identified as a significant reason for growth in the demand for vehicles in the country during H1 2008. Also, soaring sales of light and flex-fuel cars, which run on the combination of ethanol or gasoline, are fuelling the growth in the auto sector of the country.
Moreover, a rapid expansion in availability of credit enables automobile industry to provide more lending to its customers. The continuously increasing interest rates are boosting the Brazilian auto sales as about 70% of industry’s sales are supported by installment buying.
Further, the central bank of Brazil increased the Selic base rate twice in 2008 and the year is expected to see more hikes before end. Thus, fearing of interest rate hikes, a large number of people bought new vehicles in June 2008.
A RNCOS Research Analyst said, “An increase in customer spending due to rise in disposable income lead to growth in auto industry of Brazil. Also, growing Brazilian economy with rise in disposable income of the consumers will encourage more and more people to buy fuel efficient automobiles and boost the Brazilian auto industry. Thus, it will provide ample growth opportunities to auto makers and dealers in the country.”
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