São Paulo – The lowered Tax on Industrialized Products (IPI, in the Portuguese acronym) – which is being gradually raised again since January –, combined with low interest rates and availability of new vehicles were the key factors that drove up sales of light motor vehicles (passenger and utilitarian vehicles) in the first two months of 2013, the best-ever result for Brazil’s auto industry. The analysis is from the president of the National Motor Vehicle Manufacturers Association (Anfavea), Cledorvino Belini.
“Sales were good due to the fact that the IPI is only partially back to speed, it will be up some more in April and then fully re-established in July. The market has reacted positively to that, in addition to low interest rates and credit availability, which were key factors to the increase in sales,” said the Anfavea president.
Light motor vehicle sales in January and February amounted to 428,700 units, up 10.3% from the same period in 2012. Output stood at 508,600 units, up 18.4%.
The Anfavea president believes vehicle sales should remain bullish in coming months, despite the IPI increase. “As the IPI goes up, some price-versus-demand elasticity must be factored in. However, provided that the entire economy is moving at a certain speed, it may well absorb the effects of the increased tax,” he said.
Sales were down in February from January. Sales were down from 243,400 vehicles in January to 185,200 in February, which, according to the Anfavea, was due to the fact that February has less working days, and is traditionally a month in which car sales are down.
*Translated by Gabriel Pomerancblum
