Brazil’s Vehicle Sales Down 10%, Industrial Output 3% Down for the Year

Fiat Brasil Compared to the same period last year, sales of vehicles in April were down 9.5%, in Brazil. According to the Brazilian Auto Dealers Association (Fenabrave), a total of 406,496 vehicles were licensed in April. That was down 15.96%, compared to March 2012. Fenabrave says it has now revised its forecast of the vehicle sale increase for this year to 3.4%, down from 5.76% at the beginning of the year.

 

Automobile sales in April 2012 had their worst performance since April 2009, with a drop of 10.84% in sales, compared to April 2011.

The only vehicle segment were there was an increase in sales was in farm machinery, up 4.84% (April 2012 to April 2011 comparison).

The biggest drop was in sales of buses, down 21.47%.

The Brazilian automobile and light-duty truck segment is dominated by Fiat, with 21.8% of the market, and Volkswagen, with 20.8%.

Meanwhile industrial production fell once again in March, down 0.5%, compared to February. This was the seventh consecutive monthly decrease in the industrial sector.

Although there was an increase of 1.3% in February, there is now a cumulative drop of 3% in industrial production for the year. Compared to March 2011, output in March 2012 was down 2.1%.

According to the government statistical bureau (IBGE), industrial sector output in March was down in 18 out of the 27 segments it surveyed.

One of the nine segments where there was growth was automobiles, which is heavily weighted in the survey. It was up 11.5% in March, and cumulatively up 26.2% in February and March, but had fallen 31.2% in January.

Automobile segment production in March 2012, when compared with March 2011, was down 7.5%.

Argentina

Brazilian exports to Argentina fell 27.1% in April, compared to the same month a year ago. As an overall percentage of total exports, sales to Argentina were 8.7% in 2011, but have fallen to 6.9% this year.

The Ministry of Development, Industry and Foreign Trade (MDIC) has expressed concern. According to the executive secretary at the ministry, Alessandro Teixeira,

“There is no way to deny that measures implemented by Argentina have affected our exports. We are constantly monitoring the situation and when there are sharp changes, for better or worse, we set up meetings with Argentine authorities.”

Teixeira explained that Brazil has to take into consideration the reasons behind what Argentina was doing.

“Argentina has gone through a very difficult time in economic terms. We believe it is legitimate for a country to defend its industrial base and we are trying to understand exactly what problems they are having. Our goal is to assist Argentina, rather than just simply apply punitive measures or make decisions that will make relations more difficult.”

Brazil-Argentina trade swings back and forth. And as it tends to favor one country, the other takes action to “balance” the relationship. Even so, the trade relationship has been growing steadily for over a decade.

In 2008, when bilateral trade broke a record reaching US$ 31 billion, Argentina had a trade surplus of US$ 2 billion with Brazil. But, in 2010, when another record was set, Brazil had a trade surplus with Argentina of US$ 3.5 billion.

The forecast was for total trade to reach US$ 40 billion this year and the deficit with Brazil to grow larger. However, Argentina stepped in with non-automatic licensing and other non-tariff barriers, not to mention a snake pit of red tape, and the result is the drop in Brazilian exports reported in this article.

It should be mentioned that the latest World Economic Forum Trade Facilitation Index puts Brazil and Argentina very near the same level. Brazil is 87th on the list and Argentina is in 95th place.

ABr

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