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IPI Tax Breaks Fuel Brazilís Auto Sales in Sep 09
Oct 13, 2009

Automobile sales in Brazil grew 19.85% during September 2009 on government tax breaks, lower credit crisis and new car models.
The Brazilian automobile industry marked a decent progress of 19.85% in its sales for September 2009 over August 2009, said the national dealers' association Fenabrave, as reported by Reuters. The automobile sales for the month of September 2009 were higher by 16.7% from the corresponding month a year ago (September 2008).
Sales of new trucks and cars during September 2009 recorded rapid upsurge to reach 296,651 Units as customers rushed to auto showrooms to take advantage of an expiring tax break.
In the end of June 2009, the government decided that the breaks given on IPI tax should be extended so that people could be persuaded to invest in industrial goods and automobiles. IPI tax break on industrial goods was extended for six months, while trucks and passenger cars could enjoy relaxation for three months since their sales had slumped significantly owing to the global credit crisis.
The auto industry also posted car sales growth of 5.49% in January-September 2009 to reach 2.21 Million Units over the same period a year back. Auto manufacturers are optimistic of doing well in car sales this year as business conditions such as tax break, lower credit costs and new car models are favorable to growth.
According to industry estimates, Brazil is expected to sell over 3 Million vehicles this year compared to 2.8 Million vehicles sold last year (2008).
The prospective growth of Brazilian automobile industry for remaining months of 2009 seems healthy and it will create more opportunities for related sectors such as automobile insurance, said RNCOS in its new research report “Brazil Automobile Industry till 2010”.
The report highlights that the automobile insurance market in Brazil will grow significantly in near future in line with the number of registered automobiles.
Moreover, automotive steel consumption in Brazil is expected to see strong upsurge in future with growing automobile industry. Crude steel production will also increase to meet the growing steel demand stemming from the auto industry.
According to a research analyst at RNCOS, “Brazil’s automobile industry has given impressive results in recent months and become one of the strongest industries owing to the government tax incentive that reduced car prices and attracted consumers to showrooms. The current industrial production tax relaxation will gradually expire by the end of 2009, which will result in high cost for end consumer. However, the return of IPI tax will be gradually absorbed by the market with rise in disposable income on the back of strong economic growth.”
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