9 Jan 18

Brazil returns to black, vehicle sales up in 2017

Following four years of being in the red, vehicle sales in Brazil made a comeback in 2017, increasing nearly 10% year-over-year and surpassing expectations of local car manufacturers association Anfavea.

Throughout the year, a total of 2.24mn passenger cars, light commercial vehicles, busses and trucks were licensed, being 9.3% more than the number of vehicles licensed in 2016. Early in the year, Anfavea was forecasting an increase of only 7.3%.

In terms of manufacturers, Chevrolet led last year with 393,000 vehicles licensed. It was followed by Fiat with 297,700 units and Volkswagen not far behind with 286,800 units, the latter of which saw a 26% jump in vehicles licensed compared to the previous year.

Ford also saw a considerable rise, increasing by 19% to No. 4 with 215,000 units. It was followed by Hyundai and Toyota.

What about 2018?

As for 2018, it seems like the overall consensus is that the market will not fall but some are more optimistic than others.

Many representatives of the automotive sector feel that 2018 should see even better growth than 2017 as they await new automotive industry rules being defined under the federal government’s Rota 2030 program.

According to Anfavea president Antonio Megale, there is no risk of Rota 2030 facing the same problems of Inovar-Auto which were condemned by the Word Trade Organization last year, local paper Folha De São Paulo reported.

The problem we are facing now, according to Megale, is the delay in defining Rota 2030, something that was originally planned to be announced in October.

Currently, rules under the program are being debated between the development, industry, and foreign trade ministry and the finance ministry. While the former is seeking tax breaks and other incentives to stimulate the industry, the latter feels that incentives must be minimized owing to the current condition of federal government coffers.

Regardless of the outcome, an announcement is expected in 1Q18.

Not out of the woods yet

Although the 2017 recovery is definitely a relief for the industry, local consultant Fabio Braga does not believe that robust growth will remain firm as of yet, owing to economic and political uncertainties that still longer in the minds of consumers when it comes time to actually buying a car, the paper said.

“Although we are seeing some of the lowest interest rates in history, there are still restrictions that limit purchasing power,“ said Braga who is the operations director of consultancy J.D. Power in Brazil.

Authored by: Daniel Bland