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Brazil?s Thriving Automobile Industry
Dec 29, 2007

A reduction in interest rates and rising income of Brazil has led to a boom in the demand of automobiles and hence, sales.

Supported by a decrease in domestic loan costs, new auto sales figures in Brazil should swell to nearly 17.5% to an all time record of 2.88 Million units in 2008, as per National Association of Automotive Vehicle Manufacturers (Anfavea), according to the news reported by
Reuters.

Despite this fact, Anfavea has also showed that sales of new cars had fallen 3% in November to 237,000 units from October's (2007) record. This, however, went up nearly 30% from November 2006. The output fell 10% from October 2007 to 267,500 units, but again shot up by 20.4% from November 2006.

But, “We should see strong growth in 2008 with large sums invested in infrastructure. Incomes across the population are also expected to rise, which will contribute to consumption,” said Jackson Schneider, the association's President, as per the statement published by
FXstreet.

Output is estimated to increase by 8.9% to 3.24 Million vehicles in 2008, sparked by an increase in domestic demand. A fall of 5.4% to 740,000 units is anticipated in automobile exports, as per Anfavea.

Industry experts say that the overall vehicle output and sales have increased drastically over the past some years, thanks to strong economic growth and a downfall in interest rates, which has made financing cheaper, thereby relieving suppressed demand for financed vehicles.

In addition, flex-fuel vehicles, which use a combination of gasoline and ethanol, or sugarcane alcohol, witnessed a small rise in their market share. The flex-fuel vehicles in November 2007 were responsible for 87.1% of sales from 86.5% in October 2007, as per Anfavea.

The increasing apprehensions among consumers towards environment have sparked sales of the flex-fuel vehicles. At present, the entire world is being threatened by global warming, hence, auto manufacturers and government of countries are trying to launch new ideas to encourage end users to use alternative fuels. Many people are in the search of environmental friendly vehicles.

As per a Research Analyst at
RNCOS, “Brazilian automobile industry is in the process of launching many consumer-supportive policies and technologies. The booming economy of country as well as local people has promoted the demand for cars in Brazil. This has further influenced the overall sales of the automobile sector in Brazil. The improvement in road conditions also seems to be a major factor to promote auto sales in the near future.”

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