São Paulo – Motor vehicle production hit an all-time high in January in Brazil, according to figures released this Wednesday (6th) by the National Motor Vehicle Manufacturers Association (Anfavea). A total of 279,300 units of passenger vehicles, trucks and buses were made, up 31.9% from 211,700 units in January 2012, and up 7.7% from December 2012. Motor vehicle sales were also the highest ever for the month, as the National Motor Vehicle Distributors Federation (Fenabrave) had already announced on February 1st: 311,500, up 16.1% from January 2012.
Anfavea president Cledorvino Belini acknowledged that some of the sales concern vehicles sold in December, but paid for in January. He said, however, that the industry had a good month of January because there is credit available, insolvency rates are on their way down, and there was a slight increase in the Tax on Industrialized Products (IPI, in the Portuguese acronym).
“January was good because the IPI was only raised by 2%, therefore interest rates were low and vehicle prices were low, so consumers were able to buy. It is also a sign that the country is doing well, with full employment (the employment rate was 5.5% in 2012) and record-high vehicle output and sales in January,” said Belini. He also said production grew because sales in December were high (343,800 units) so inventories were low.
Anfavea estimates that this year, vehicle production should be up 3.5% to 4.5% from 2012 at 3.970 million. Agricultural machinery production should be up 4% to 5% to 72,900 units. “If the Gross Domestic Product (GDP) grows at the projected rate of 3% to 4%, we will be able to sell 4% to 5% more,” said Belini, who is also Fiat’s president to Latin America.
Agricultural machinery
Agricultural machinery sales were also up in January. Sales amounted to 5,859 units, up 32.6% from 4,417 units sold in January 2012, and up 2.3% from December. According to Anfavea director Milton Rego, the increase in sales was a consequence of Brazil’s agricultural performance.
“The good phase for the industry started in September, when the PSI (the interest rate of the federal government’s Sustained Investment Program) was lowered to 2.5%. Another reason is the great moment for agribusiness. There is optimism regarding maize and soy prices, greater productivity, and more capitalized growers,” said Rego. In January, 6,133 agricultural machines were made, down 9.5% from 6,776 in January last year, and up 6.1% from December 2012.
Lack of competitiveness
If on the one hand farmers are psyched about the domestic market, on the other hand exports are disappointing. In January, vehicle exports reached 36,200 units, up 9.5% from January 2012, when 33,100 units were exported. However, revenues were down 6.1% at US$ 1.003 billion. Anfavea forecasts that vehicle exports should be down 4.6% this year, to 420,000 units.
Regarding agricultural machinery, exports were down 46.4% from both January 2012 and December 2012. In January 2013, 817 machines were exported. In January and December 2012, exports stood at 1.523 units. The Anfavea estimates that exports and revenues will remain at the same level as 2012’s, at 16,900 units and US$ 14.7 billion.
To Belini, the lack of competitiveness of Brazilian product is the main hurdle to increasing exports. He said Anfavea projects that exports should be down because some of the costs to the industry have increased early this year, and the exchange rate is not favourable. He recognized, however, that the Brazilian government is trying to reduce costs, as is the case with the recent power rate cut.
*Translated by Gabriel Pomerancblum
