Despite Big Drop from December Brazil Auto Industry Has Best January Ever

Brazilian car industry In Brazil, production and sales, domestic and foreign, of vehicles had their best January in history. But December 2010 was so good that there was actually a drop of 9.1% in January, compared to December.

January production of 261,800 vehicles was a record for the month, up 6.4%, compared to January 2010, when total production was 245,900. Exports of vehicles in January 2011 were up 10.7%, compared to January 2010.

However, the president of the Automakers Association (Anfavea), Cledorvino Belini, complains that domestic manufacturers are losing ground to imports and says that the association intends to send the government suggestions on how to make Brazil’s auto industry more competitive.

Among the proposals are an “emergency package” that will include more flexible labor laws, improved infrastructure and ways to reduce taxation and the cost of capital.

Belini says Brazilian restrictions on auto imports are already at the limit permitted by the World Trade Organization so other measures will be necessary. “We do not want more protection for the domestic market. What we need is to be more competitive abroad,” he declared.

Anfavea says the sector had a US$ 6 billion deficit last year. Most imports come from Argentina (52.8% ) and Mexico (10.6%), but Brazil has trade agreements with those countries that allows it to run an auto sector surplus of US$ 1.8 billion with them.

The problem with auto imports is that overall they have quadrupled since 2005, going from 5.1% of vehicles sold in Brazil in 2005, to 20% in 2010 and jumping to 23.5% in January 2011.

Meanwhile, exports as a percentage of domestic production have fallen; in 2005, 31% of the vehicles produced in Brazil were exported. But in 2010, only 15% were sold overseas.

Belini points out that auto sector employment rose from 136,124 to 137,291 last year.

Trade Surplus

In the first week of February (February 1 to 4), Brazil had a foreign trade surplus of US$ 432 million, reports the Ministry of Development, Industry and Foreign Trade.

Exports totaled US$ 3.531 billion and imports US$ 3.099 billion. The average daily value of exports was US$ 882.8 million; imports US$ 774.8 million.

So far this year, the cumulative foreign trade surplus is US$  856 million, compared to a deficit of US$ 351 million during the same period in 2010.

For the year to the end of the first week in February, the cumulative total of exports is US$ 18.746 billion, and imports US$ 17.890 billion.

ABr

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