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Brazil's Car Production Increases Sharply in May
Jun 21, 2010

Brazil’s car production in May 2010 increased 6.6% from April 2010 on account of surging demand in export market.

According to the national automakers’ association Anfavea, automobile production in Brazil increased sharply in May 2010, reported Reuters.

In May 2010, carmakers produced a total of 309,600 Units, which was 6.6% up from April 2010 and 14.9% more than May 2009, noted the association. The production figures underlined the expectations that the economy of Brazil may be overheating, posting better than anticipated growth figures for the first quarter.

Increase in production level is mainly to meet the surging demand in export markets. Exports in May 2010 stood at $1.18 Billion, representing 27.2% month-on-month increase and a whopping 77.5% increase from May 2009.

Most of the Brazilian automobiles are exported to Europe and North and South American countries. The demand for cars in these countries is reviving as they are recovering after recession.

Moreover, sharp jump in exports also helped to make up for the sluggish demand in domestic market, which recorded a second consecutive monthly decline in sales after a boom in first quarter due to government tax incentives. Vehicle sales in May 2010 reached 251,100 Units, representing a decline of 9.6% from April 2010 but an increase of 1.7% from May 2009.

However, the sales in domestic market are also expected to increase in coming times. Brazilian auto industry is projected to sell 3.8 Million Units of cars in 2013, according to “Brazil Automobile Forecast to 2013”, a market research report by RNCOS. Lowering interest rates and easy auto financing schemes introduced by leading banks will help in the growth of the market, reveals the report.

Industry experts have estimated that the automobile exports will also increase in coming months as a result of the Brazilian government’s recently declared initiatives to increase exports. This will further boost the vehicle production in the country, which is anticipated to increase by 6.5% in 2010 to reach 3.3 Million Units.

According to a Research Analyst at RNCOS, “Brazilian auto industry, which is one of the world’s largest automobile producers, has been experiencing constant growth for past several years. Favorable government support for the industry and its low-cost manufacturing base as compared to developed economies are playing a crucial role in the industry’s growth.”

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