Rental companies suspend purchases and automakers have a sea of ​​cars – 06/28/2023 – Market

Automakers and car rental companies expect the government to formalize the expansion of credit for the purchase of cars and also include discounts for companies. Meanwhile, the patios are still crowded, and the brands announce stops in production – despite the incentive program aimed at the consumer. As the first round of the discount program was restricted to individuals, sales for company fleet cars, which include rental companies, were blocked.

The Brazilian waited to buy the car at a discount, but the increase in movement at dealerships contrasts with the ‘sea of ​​cars’ on the automakers’ patios and with the announcement of a reduction in production, such as that made by Volkswagen last Tuesday (27).

The automaker announced that it would temporarily stop production at the units in São José dos Pinhais (PR), São Bernardo do Campo and Taubaté (SP), justifying the decision to brake the automotive market.

A Sheet, Volkswagen confirmed that the ‘sea of ​​cars’ in its courtyard in ABC is the effect of the halt in sales to companies and car rental companies. There was a 31% drop in sales to legal entities from May to June.

According to analysts, automakers are seeking a balance to avoid excess inventory, an asset that depreciates day by day.

At rental companies, purchases of new cars priced up to R$ 120,000 are suspended for now, according to Marco Aurélio Nazaré, president of the national council of Abla (an association that represents the sector). He claims that demand for July, the school vacation period, will be impacted.

“Orders are in the backlog, but invoicing is blocked. Even if the cars were invoiced this week, there would not be time to place the vehicles with availability for July, because they have to be transported, delivered and licensed”, says Nazaré.

Still according to him, there was also depreciation in the price of older vehicles from rental companies that are sold for fleet renewal. “Once there was an incentive program with the reduction in the car price, automatically, the pricing of the sale was impacted”, he says.

According to Nazaré, rental companies buy around 50,000 cars per month, and 58% of them are entry-level, priced below R$120,000. Abla has not yet released the balance for June, but the expectation is that the number of new vehicles acquired will be very low, he says.

The automobile sector reached, last Monday (26), the level of 109 thousand cars and light commercial vehicles registered in the country in the month of June, according to a survey carried out by the consulting firm Jato. Of the total, only 39.2% represented direct sales, made by automakers to audiences such as rental companies, people with disabilities and taxi drivers.

According to Milad Kalume, business development director at Jato, the percentage of direct sales is low compared to the last few months, when it was above 45%, he says.

For Kalume, there is an impact of the federal government’s provisional measure that lowered the price of some cars with discounts funded by the Union. “The rental companies ended up without any kind of benefit. If they manage to buy at a discount, it will be quite residual, much less than they would like”, he says.

The government of President Luiz Inácio Lula da Silva (PT) should increase by R$ 300 million the resources for the program that gives discounts on the purchase of popular cars – the value is added to the R$ 500 million already made available.

Still according to the Jato survey, of the 109,000 vehicles sold in June, 41.5% benefited from the government’s incentive program.

When contacted, Localiza, Movida and Unidas, which are large companies in the sector, did not comment on the current situation in the segment.

Saying that the government’s measure did not meet its objective for light commercial vehicles, when looking at the patios that are still full, would be a lie, says Kalume.

“It’s a measure of consumption, which started to take effect this month. Historically, we have the second fortnight always stronger, but last month this was reversed. People stopped buying cars and started to wait.”

“Automakers are choosing to stop, because the economic moment is not satisfactory. As much as the government’s measure has helped in reducing the value, interest rates are still very high and the installments are high for those who need to finance”, he says.

Bright Consult partner Cássio Pagliarini recalls that vehicle sales by dealerships correspond to 50% of the total volume. Of the remaining half, most goes to rental companies.

“The rental companies are excluded from this purchase so far, and the sector can only count on half of sales to individuals”, he says.

He says that the increase in sales through the consumer is not enough to compensate for the losses of rental companies in license plates.

“It is necessary that the rental companies come back. For the automakers, what matters is the sales volume. As they did not reach this volume, they will not be producing non-stop.”