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Disappointing Start for Brazilian Auto Industry in January 2008
Mar 07, 2008

Brazilian auto industry experienced slump in new vehicles sale in January 2008 but expecting improvement in sales figures in coming months due to rising disposable income.
 
Anfavea, Automobile Manufacturers Association of Brazil, reported a decline in the sale of vehicles in the very first month of 2008 owing to seasonal trends, as reported by reuters.
 
There was a decline of 11.3% in sales of new cars in January 2008 as compared to December 2007 and sales reached 215,000 Units. However, it was up by 40.6% as compared to corresponding month in 2007. In January, Flex cars, that run on combination of gasoline and ethanol prepared from sugar cane, posted a drop in sale to 179, 731 Units from 200,686 Units sold in December last year. Nevertheless, the sale of flex cars went up significantly from last year January in which 120,199 Units were sold.
 
Industry experts attributed this decline in January 2008 to exodus of large number of Brazilians for vacations and this kept them away from buying automobiles. Although the sale of vehicles in January 2008 was less, Anfavea is anticipating the situation to get better in coming months and the sale is expected to grow by 17%, making up for 2.88 Million Units. On the back of rising domestic demand for vehicles, Anfavea also expected that output of automobile industry would grow up to 3.24 Million vehicles in current year.
 
Decline in interest rates and extension of repayment period of loans empowered Brazilians to expend on automobiles which, in turn, is boosting the automobile industry of the country. Both these factors will draw attention of Brazilians toward new automobiles in remaining months of the year.
 
Moreover, Brazil’s economy is maintaining high growth pace and consequently, disposable income of middle and lower sections of its society is also rising. So people can now afford to buy new vehicles. Besides, industry experts recognize that increasing expenditure capability of Brazilians and introduction of fuel-efficient cars will continue to attract people in 2008. 

According to a Research Analyst at RNCOS, “Brazilian automobile industry will keep breaking its past records in terms of selling new vehicles as people have easy access of credits at lower interest rates. January’s sales of new vehicles in 2008 might have disappointed the automobile industry but in coming months, sales will increase as many factors are favoring growth in the industry.”

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