Brazil's auto exports tumbled 21% in July from a month ago, the country's automakers' association said on Tuesday, blaming a monetary crisis in neighboring Argentina for the shortfall and adding that it expects exports to be steady for the year, not higher as it had predicted before last month.
Argentina is by far the largest buyer of Brazilian cars. But economists now expect Argentina to suffer a recession this year after a run on the peso currency prompted the government to hike interest rates and turn to the International Monetary Fund for a US$50 billion stand-by credit.
Overall, Brazilian auto exports are down 2.8% so far in 2018.
We are still predicting stability...but now with some risk, Antonio Megale, the president of the association known as Anfavea said during its monthly results conference. Megale added that Latin American markets are volatile and can have reversals both positive and negative.
Until last month, Anfavea had predicted exports would go up in 2018, but this is the second month that the association is predicting the year will ultimately end up being flat.
Automobile production in Brazil fell 4.1% in July from the previous month, while sales rose 7.7% to their highest level since December 2015, Anfavea said. Production numbers are usually considered a better gauge of the market outlook.
Automakers in Brazil produced around 245,800 new cars and trucks last month, while sales totaled about 217,500 vehicles. Compared to a year ago, auto output rose 9.3% and sales jumped 17.7%.
Brazil was one of the world's five biggest auto markets until a recent downturn and it remains a major base of operations for Fiat Chrysler Automobiles NV, Volkswagen AG, General Motors Co and Ford Motor Co.