Brazil Q1 Sales Drop for First Time Since 2003
The 5-year, no-down-payment loans that spurred sales in recent years have “practically disappeared,” and a 30% tax hike on imports also has hurt the market, an industry group says.
SAO PAULO – First-quarter vehicle licenses in Brazil fell 0.8% compared with year-ago, marking the first drop in January-through-March volume since 2003, on sales of 818,400 cars, vans, trucks and buses.
The break in eight years of first-quarter growth sounded an alarm bell among auto makers and dealers pressuring the government to adopt short-term measures designed to boost sales, especially relaxing credit rules.
President Dilma Rousseff has not eased consumer credit, but she has announced measures offering auto makers that want to set up operations in the country more flexible rulings on imports and domestic content.
March sales of cars, trucks and buses totaled 300,600, 1.8% less than like-2011, but 20.1% more than in February.
Flavio Menghetti, president of the National Federation of Vehicle Distributors, complains “the banks tightened the funnel, especially for the less-expensive cars and used models.”
The 60-month, no-down-payment loans that spurred car sales in recent years have “practically disappeared,” he says, adding a 30% tax increase on imported vehicles also hurt the market.
Banks have restricted credit availability in part because 5.5% of vehicle-loan contracts were in arrears in February. But Menghetti believes that figure will be reduced by the end of the year’s first half, and bank loans will be easier to get in the second half.
There is a 40 days’ supply of new cars at Brazilian dealerships and on auto makers’ lots, far more than the 30 days’ average considered reasonable for the sector.
About the Author
You May Also Like
