Brazil sales to drop 21% in 2015 due to weak economy
OEMs cut production, add capacity in hope of future growth
・In Brazil, vehicle market has been shrinking due to weak domestic economy. Recession in Argentina, Brazil's leading automotive trading partner, also has a negative impact. Besides, the Brazilian government's protective measures affect the country's automotive industry.
・As Brazil's automotive market continues to be stagnant in 2015, the Brazil National Association of Motor Vehicle Manufacturers (ANFAVEA) lowered its initial 2015 sales forecast disclosed at the beginning of the year twice to 2.78 million units, 20.6% down year-over-year (y/y) (announced in June 2015). The Association also adjusted its full-year production forecast downward to 2.59 million units, down 17.8% y/y, while it maintains its export forecast at 340,000 units, up 1.1% y/y (including medium- and heavy-duty commercial vehicles).
・Recently, the automakers locally producing their vehicles have cut production to cope with a decline in demand. In the mean time, many OEMs, anticipating Brazil's future growth, are implementing long- and medium-term investment plans to enhance their competitiveness and localizing production to avoid the IPI tax increase.
・According to LMC Automotive's forecast disclosed in the second quarter of 2015, light vehicle sales in Brazil for 2015 are expected to decline by 21% y/y to 2.6 million units. The company also pointed out that risks lie very much to the downside, and sales may further decline to 2.5 million units. Consumers are increasingly wary in the face of the rising unemployment rate and soaring inflation. Due to the severity of the economic downturn, sales are not expected to return to 3 million units until 2019.
Brazil and Paraguay: Construction of new plants and expansion of production capacity (Jul. 2015)