--Brazil auto sales continue to slump, but signs of incipient rebound seen after tax cut
--Interest-rate reductions to help economy, auto sales in second half, Anfavea says
--Weak global demand led to lowest exports since 2009
(Adds Anfavea comments starting in the third paragraph.)
By Paulo Winterstein
SAO PAULO--Brazil's motor-vehicle sales showed signs of improvement at the end of May after a cut on auto taxes, and should continue to improve in June, Brazilian Motor Vehicle Manufacturers Association, or Anfavea, said Wednesday, after reporting a drop in sales, output and exports last month.
May sales totaled 287,465 cars, trucks and buses, a 9.8% decline from the same month in 2011, Anfavea said. Sales recovered from a weak April, jumping 11.5% and bringing year-to-date sales to 1.36 million vehicles, or 4.8% less than at the same time last year.
"We're living a new scenario with the reduction of the IPI," said Anfavea President Cledorvino Belini, referring to the tax on manufactured products that was reduced last month. In addition to cutting the IPI tax, the government also eased banks' reserve requirements on credit given for auto purchases.
With the changes, vehicle sales jumped during the end of May and the start of June, Belini said. While sales averaged 13,067 vehicles a day in May, up from 12,894 a day in April, Belini said sales jumped to 18,500 on the last day of May and averaged about 15,000 during the first three business days of June.
"We only had two days in May [with the lower tax.] The bigger impact from the tax cut will be seen in June," Belini said. The recovery in sales should help clear stockpiles, which currently are equal to 43 days of sales. Belini said a stockpile higher than 35 days is unhealthy for the industry.
With the gradual recovery of Brazil's economy in the second half of the year thanks to a slew of interest-rate cuts, sales should rebound further, he said. Because of that recovery, he doesn't see a need to extend the tax cuts past their expiration date at the end of August.
At the end of June, Anfavea will review its growth estimates for this year, likely reducing its current forecast of growth of 4.5% to 5% this year.
Truck sales, which have been suffering all year after Brazil boosted emissions requirements, continued their slump, declining 28% on the year and falling 2.1% in comparison with April, Anfavea said. Sales of cars and light commercial vehicles performed a bit better, falling just 8.7% from the year-earlier month to 274,278 units.
Vehicle output in May also declined on the year, while improving in comparison with April. May output reached 280,768 vehicles, 5.3% less than in the 2011 period, but 7.6% more than in April of this year.
As a result of slower truck demand, truck output was down 41% from May 2011 and slipped 2.7% from April. Car and light commercial vehicle output in May climbed 7.9% from April, but was still down 5.3% compared with 2011.
So far this year, vehicle output is down 9.5% from the same time last year, with 1.28 million cars, trucks and buses produced through May 2012.
May exports fell on the year for the first time since November 2009 as weak global growth erodes demand.
"The [international] market just isn't buying," Belini said. "Europe has seen a brutal drop in sales volume, and even Latin America has been feeling the slowdown. But now we are seeing some gains, because the exchange rate improved, which could help with new orders."
Brazil's real has weakened as global investors flee emerging markets to buy safer assets. The real traded at a record of 1.53 per dollar in the middle of last year, but this year already slumped to as weak as 2.10 per dollar. Belini told reporters that this decline should help the industry in the future as imports to Brazil become more expensive, while its exports become more competitive.
May exports totaled $1.34 billion, a 4.8% drop from the year-earlier period and a 4.4% decline from April. So far this year, export values totaled $6.6 billion, a 9.9% increase from 2011.
Export volumes, however, dropped precipitously, with just 26,700 vehicles shipped during the month, the lowest volume since July 2009. May exports are 40% below volumes in the 2011 month, and represent a 45% drop from April. So far this year, export volumes are down 9.9%.
In terms of passenger-car sales, Fiat SpA (F.MI, FIATY) was once again the market leader, but by a very narrow margin. Fiat sold 45,865 vehicles in May, followed by General Motors Co. (GM), which sold 45,826, and Volkswagen AG (VOW.XE, VLKAY), which sold 45,664 vehicles. Ford Motor Co. (>> Ford Motor Company) was in fourth place, selling 19,474 cars.
Write to Paulo Winterstein at email@example.com.