By Rogerio Jelmayer
SAO PAULO--Brazilian auto sales plummeted in February as
consumer confidence faded and a key tax incentive expired,
increasing the chances of another decline in full-year sales.
Vehicles sales including cars, light vehicles, trucks and buses
totaled 185,944 units in February, down 26.7% versus January and
down 28.3% compared with February 2014, according to auto maker
association Anfavea on Thursday. That was the lowest level of sales
since November 2008.
"We have a combination of negative factors affecting sales--the
increase of the tax on industrial goods, the decline in consumer
confidence," and rising interest rates, Anfavea President Luiz Moan
Yabiku Jr. said at a news conference.
The sharp drop in sales in February will probably lead Anfavea
to cut its forecast for sales for the full year, Mr. Moan said. The
current forecast is for no change in sales compared with 2014. If
sales do fall this year from last year, it will be the third
consecutive annual decline.
In the first two months of the year, vehicles sales totaled
439,747 units, down 23.1% from the same period a year ago, and
output declined 22% to 404,931 versus the year ago period.
The combination of weak economic growth, high inflation and
rising interest rates is hurting consumer confidence, especially
with regard to big-ticket purchases, according to economists.
Brazil's economy was stagnant in 2014, according to economists
surveyed by the country's central bank, and the economy is expected
to contract 0.58% in 2015.
In the meantime, with official inflation at 7.36%, well above
the central bank ceiling rate of 6.5%, the monetary authority is
expected to raise its benchmark interest rate even more. The
central bank raised the rate to 12.75% on Wednesday, from
12.25%.
After cutting the tax on industrial goods for new-car purchases
in 2012, the Brazilian government this year let the exemption
expire. Known as the IPI, the levy raised prices 4.5% to 7%,
depending on the size of the vehicle, according to Anfavea.
With the drop in sales, some auto makers in Brazil have started
to lay off employees and implement voluntary severance programs and
force mandatory vacations.
Brazil's auto industry ended February with 142,317 employees,
down from 144,163 at the end of January and from 156,133 at the end
of Feb., 2014, according to Anfavea.
Vehicle production in Brazil dropped to 200,111 vehicles in
February, a decline of 2.3% from January and down 28.9% from
February, 2014. Exports rose 31% from January to $860 million,
though that was a decline of 15.5% from February 2014.
Exports in the first two months fell 20.8% versus the same
period a year ago to $1.5 billion
The largest auto makers in Brazil in terms of sales are Fiat
Chrysler Automobiles NV (FCAU), Volkswagen AG (VLKAY), General
Motors Co. (GM), and Ford Motor Co.(F).
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com