MercoPress. South Atlantic News Agency

With tax breaks, March auto industry sales in Brazil are record

Auto industry sales in Brazil soared in March as consumers flocked to dealers to benefit from government tax breaks, according to data from the national dealers’ association Fenabrave.

Sales jumped 36.1% in March from February to 271.393 units, the fourth straight month of gains and compared with March 2008, sales rose 16.9%, making it the best March on record.

“The worst of the crisis is behind us,” said Sergio Reze, president of the Fenabrave. “Of course we are celebrating, but we need to have our feet on the ground.”

On Monday, Brazil's government extended tax breaks for the auto industry that were set to expire at the end of March, seeking to keep sales up and prevent further layoffs by automakers. The incentives will now last until June 30.

Reze said sales surged in March as consumers raced to buy cars at cheaper prices on expectations the tax breaks would end.

Vehicle sales had been falling for two months running in Brazil when the government announced the tax breaks in December. Sales have risen every month since then, but automakers have reduced output sharply to cope with a drop in demand, laying off thousands of workers and cutting investments.

Brazil remains one of the few bright spots for global automakers, which have seen March sales plunge 37% in the United States, 25% in Japan and 19% in South Korea. Fenabrave kept its forecast for a 3.1% increase in sales in 2009 because of the tax breaks and as local interest rates fall.

Brazil is a major market for global automakers such as Italy's Fiat, Germany's Volkswagen, US General Motors and Ford Motor. Asian and French manufacturers are also boosting their presence in Brazil, Latin America's largest economy.

Fiat led Brazil's market in March with 42.568 units sold; followed by VW with 40.251; GM, 29.303 units and Ford 22.603.