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Government Support Boosts Brazil Car Sales in June 2009
Jul 17, 2009

Car sales in Brazil surged 21.5% to 300,157 Units in June 2009 on account of tax relaxation, improvement in credit market and high consumer confidence.

Thanks to the government support, liquidity in credit market and slight improvement in economic conditions, cars sales in Brazil touched a record height in June 2009, said the National Motor Vehicle Manufacturers or Anfavea, as reported by Wall Street Journal.

Motor vehicle sales in Brazil jumped to 300,157 Units in June 2009, an increase of 21.5% since May 2009. Vehicle production also cranked up after the carmakers had worked through their existing stock. The total output of vehicles rose 8.4% to 283,875 Units in June from the previous month, and the export sales made marginal gains of 1.5% to $610 Million in the same month.

Tax breaks were considered to be the main cause for dramatic rise in vehicle sales. Impressive statistics for June 2009 confirm the impact of tax breaks given by President Luiz Inacio Lula da Silva for automobiles and home appliances to boost the industrial production.
 
Some industry experts believe that the combination of higher consumer confidence and lower prices drive people to showrooms. Besides, the overall market scenario has improved with easy accessibility of credit and higher consumer confidence that have inflated vehicle demand in the country.

Despite the global economic slowdown, the domestic automobile demand has shown remarkable resistance against crisis and sales flared up after the abolition of IPI industrial tax on cars that cut down cars prices by nearly 7.5%.

According to "Brazil Automobile Industry till 2010", a report by market research firm RNCOS, Brazil is among the ten leading automobile manufacturing countries in terms of volume production. Besides, it has a strong consumer base considering the fact that automobile penetration rate per thousand people is very low, representing tremendous growth opportunities. With the improvement in economic conditions, the demand for automobiles will soar in the country. Easy and comprehensive financial packages and increasing connectivity between urban and rural areas also bolster the automobiles sales in Brazil.

A RNCOS Senior Research Analyst said: "The Brazilian automobile industry forms an important segment of the country's economy and creates huge number of jobs. It also supports other industries such as steel and auto components. As the market and financial conditions get better, the auto industry will come back on fast growth track."

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