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Brazil Auto Sales Bounced Back in Jan 2009
Feb 21, 2009

Six months consecutive decline in auto production in Brazil at last came to an end in January 2009 when consumer demand increased, encouraging companies to raise output.

The national automakers’ association Anfavea disclosed that after a period of six months, automobile production in Brazil spurred in January 2009, as reported by Reuters.

Following the decline of 34.4% in November 2008 and 47.1% in December 2008, the automobile output bounced 92.7% in January 2009 against December 2008. Auto manufacturers revealed that the rebound in output continued, with average production rising to 10,800 vehicles per day through February 6, 2009 from 8,900 in January 2009.

Vehicle sales in January 2009 totaled 197,500 Units whereas the output stood at 186,100 Units. The sales of new automobiles climbed 1.5% in January 2009 against December 2008, the second consecutive monthly gain after 9.4% rise in December 2008.

Fiat recorded jump of 1.75% in sales of cars and trucks to 43,312 Units in January 2009 over December 2008. Similarly, sales of Volkswagen increased 1.9% to 41,134 Units whereas GM recorded 30% rise.

After a sharp decline in output on account of weak demand, the Brazilian automobile industry has increased because the companies have restarted their assembly lines after stopping production due to low demand. Past few months have proved terrible for the automobile industry as the demand tumbled amidst global economic slowdown. Realizing the impact of economic crisis, the Brazilian government provided tax breaks at the end of 2008 to boost demand, translating into increase in auto production.

Moreover, the period between November 2008 and December 2008 was collective holidays for auto industry to clear the inventories at dealers’ end. Some of the workers returned to their jobs in January 2009 while the work furloughs continue for many laborers.

Although the auto industry showed signs of improvement, the Brazilian economy is struggling with declining consumer demand. Sales of trucks, buses and new cars tumbled nearly 8.1% to 197,500 Units in January 2009 against the same month a year ago. These figures indicate toward the troubles auto industry is currently facing.

According to a Research Analyst at RNCOS, “The liquidity flow in financial market and credit conditions have improved, but they still are far below the level recorded before sales slowdown. Although auto sales and production surged in January 2009, it is too early to comment on its future performance.”

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