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Brazil – Automobile Output Goes Up in August ‘09
Oct 01, 2009

Brazil’s automobile production increased in August 2009 in wake of surging demand from domestic and export markets.
 
The national automakers’ association, Anfavea, revealed that automobile production in Brazil increased in August 2009, pointing towards the recovery in the sector, reported The Wall Street Journal.
 
Automobile production rose to 294,400 Units in August 2009, up 4.4% from July 2009; however, the figure was 5.7% down from August 2008. Earlier in July 2009, the production declined 0.9%, after going up for two consecutive months (May and June 2009).
 
High demand in both domestic as well as export markets is giving the requisite growth impetus to the automobile production in Brazil. Brazil serving as a low cost manufacturing base in comparison of the developed countries is yet another significant factor that is favoring the growth of country’s automobile industry. Moreover, increase in output in August was most probably to prepare for a surge in inventory to meet the consumers’ demand in September.
 
In this context, a recent research report “Brazil Automobile Industry till 2010, by RNCOS states that Brazil’s automobile production is anticipated to touch record 3.46 Million Units this year, at a CAGR of around 7.6% from 2005.”
 
In the meantime, sales of automobiles in August 2009 dipped 9.6% from July 2009. However, the sales firmed 5.5% to 258,100 Units from August 2008. The tax break offered to buyers since November 2008, resulted in record breaking year-on-year growth in automobile sales, in spite of the worst recession faced by the global economy.
 
Now, with tax break expiring for auto makers expiring by the end of October 2009, they are anticipating lower sales figures towards the end of the year (2009). Still, according to the report by RNCOS, sales are projected to reach 3.17 Million Units in 2009, driven mainly by the growth in passenger car segment. Rising disposable income and growing middle class population in Brazil will also support the car sales in coming times.
 
According to a Research Analyst at RNCOS, “Automobile industry has been recording positive growth rates for past some years, mainly on the back of strong demand from domestic market as well as favorable government policies. Although the possibility of the sector facing marginal impacts of global economic slowdown can’t be ruled out completely, a substantial revival in expected in both domestic and export market.”
 
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