Brazil Auto Makers Step Up Steel Imports, Vehicle Production

SAO PAULO – A 10% rise in the value of the real vs. the dollar in recent months is prompting auto makers here to step up steel imports while forcing them to curb exports of finished vehicles.

Fiat Automoveis SA President Cledorvino Belini says his company has begun bringing in steel from South Korea to counterbalance the 7% increase in raw material prices in the domestic market.

But the booming local market also is allowing domestic auto makers to step up vehicle production. Belini says Fiat will hire 1,500 more workers to add a third shift at its Minai Gerais assembly plant to boost production from 2,500 to 2,700 cars per day.

Volkswagen do Brasil Ltda., General Motors do Brasil Ltda. and Ford Motor Co. Brasil Ltda. also say they are stepping up the focus on domestic sales to compensate for the decline of exports due to the unfavorable exchange rates.

Volkswagen exports should fall from 204,000 cars to 196,000 units this year, but domestic sales are projected at 523,000 units, up 27% from 2006.

Volkswagen Brazil President Thomas Schmall says his company utilized only 67% of its capacity four years ago, but that figure will jump to 83% for 2007. It plans to add a third shift at its factory in Taubate, Sao Paulo.

GM Brazil President Ray Young also says exports will be cut this year. GM plans to produce 470,000 cars in Brazil this year, up slightly from 462,918 in 2006.

Through the first five months of this year, industry light-vehicle sales total 838,409 units, up 24.2% from like-2006’s 674,994.