Friday, November 4th 2011 - 08:14 UTC

October car sales in Brazil drop 10% surprising dealers and the auto industry

Car sales in Brazil dropped 10% in October compared to the previous month according to the country’s dealers association, Fenabrave turning warning lights on for the global auto industry. This follows September’s decline that affected all of Brazilian industrial production.

Manufacturing was shut down in some plants because of high inventories

Brazilian dealers sold 280.608 vehicles in October, 7.4% less than the same month a year ago and 19% less than forecasted by Fenabrave since slower production was also helped by a calendar month with several national holidays.

In September Brazilian industrial production was down precisely because auto manufacturers faced with growing inventories temporarily closed down some plants or send personnel on vacation.

According to the latest data the Brazilian economy is rapidly contracting after having expanded 7.5% last year the highest in over two decades. Analysts have estimated the economy could grow a modest 3.3% in 2011, but could also decline further.

The deceleration news comes when the main European corporations that have grown globally propped by the Brazilian market are facing a tough competition from Asian rivals plus the fact the government is demanding new investments if they wish to avoid higher taxes beginning December.

Brazil with a population of 190 million and a 25% surge of the middle class in the last decade has become a crucial market for all global automakers. Among the corporations in Brazil are Italy’s Fiat; Germany’s Volkswagen; the US General Motors and Ford; Germany’s Mercedes Benz.

Fiat kept the leadership of the market in October having sold 57.000 units, equivalent to 21.7% followed by Volkswagen with 53.300 units; GM totalled 49.800 and Ford, 22.700.

7 comments Feed

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1 GeoffWard2 (#) Nov 04th, 2011 - 01:26 pm Report abuse
This news will hit Argentina badly, also (car-parts/cars - export to Brasil). A bad time for a downturn.
2 Yuleno (#) Nov 04th, 2011 - 04:54 pm Report abuse
This news will hit brazil badly,Geoff.a decline in cars sales in Argentina will be a decline in brazil.but how does this square with a growth rate that makes brazil the 6th economy globally.something is amiss unless it's posturing for a recession to concur with the needs of global capital.this would beg the question,why is capitalism so great for the working class when the capitalist are the ones who lack discipline.the working class just do the paying
3 briton (#) Nov 04th, 2011 - 07:55 pm Report abuse
Why are you surprised, did i not say in oct, it was better to go by bicycle.
Just a wheelie thought
4 GeoffWard2 (#) Nov 04th, 2011 - 08:51 pm Report abuse
I think Brasil has been trying to take some of the heat out of the economy and to restrict the high levels of speculative capital. I may be wrong, but it seems to me that this will have some spin-off into the domestic economy, especially the buying of 'luxury goods' like cars.

Perhaps 6th place in world on GDP has a lot to do with the high price and demand over the period in question of raw materials and other commodities traded abroad.

[Gross Domestic Product: The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.]

Brasil is a huge country exporting huge tonnages of material; this must place it well in terms of GDP c.f. smaller countries trading smaller tonnages. It has a huge and growing consumer-base but its imports of finished goods is also very high.

What is unclear is if this is the Constant Price GDP - i.e. inflation compensated. This is important because Brasil is flying above its inflation ceiling.

Another worrying variable is the extent that GNP contributes to Brasil's GDP - specifically the amount of cash foreign firms generate within the country which may then 'go back home'.
5 Yuleno (#) Nov 05th, 2011 - 11:18 am Report abuse
Geoff do you not think that consumer confidence has an impact here and that companies are not buying motors.the problems in the'advanced ' economies will create drops in demand for goods in general.a drop in motors and a rise in investment in infrastructure can be expected in most countries the significance of being 6th or 7th has little relevance it's how the wealth is distributed and who controls capital,foreign or national capitalists
6 GeoffWard2 (#) Nov 05th, 2011 - 12:29 pm Report abuse
They say you can buy your way out of a recession, you can consume your way out of a recession, but when confidence goes - and I guess this normally accompanies rapidly rising inflation - governments can create 'New Deals' to re-build slumped employment and build 'things', building their way out of recession. Sometimes it works, but it does seem to need a highly-controlled 'command economy' of the type not really seen in South America.
Bringing more wealth into the country from export sales than leaves it through import purchases is a big part of the equation - otherwise all you really have is stimulating the nation's people to spend, spend, spend. And in many countries the amount owing on credit from over-spending cripples families and cripples nations.

There really is no such thing as a free lunch.
7 Yuleno (#) Nov 05th, 2011 - 06:56 pm Report abuse
There are free lunch's but they are called business lunch' New York there'll be quite a few as in London and Cannes France this week'd think they didn't have money to buy their own lunch.there would be no need to spend spend if wages took more of what labor create and capital growth less,but then capital gets moved if that was done.brazil certainly will not attempt that,the car plants will get moved if there is any hint of labor demands being listened to.

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