Vehicles: Production soars in May; sales up 10% – 06/06/2023 – Market

The production of cars, light trucks, trucks and buses in Brazil in May jumped 27.4% compared to the weak month of April, driven in part by the preparation of the country’s automotive industry to have inventories to meet the price reduction foreseen by the approved benefits by the federal government the day before, according to the automakers association, Anfavea.

May production totaled 227,900 units, and sales of new ones grew 9.8% over the same period, to 176,500, the organization said this Tuesday (6).

But compared to May last year, production rose 10.7%, pressured by a drop of almost 40% in the volume of trucks, whose sales fell 21% in the period, partly pressured by the entry into force of more restrictive rules on emissions. pollutants that made vehicles more expensive. The volume of buses produced also had a sharp drop in May over a year earlier, by 35.4%.

Licensing already showed a drop of 5.6% last month compared to May 2022. In buses, there was annual growth of 32% in this comparison.

In the accumulated result for the year, the industry shows a 6.2% increase in production, to 943 thousand vehicles, and sales of 809 thousand units, growth of 9.3% over the first five months of 2022.

SECTOR AWAITS RUSH TO STORES, SAYS PRESIDENT OF ANFAVEA

The president of Anfavea, Márcio de Lima Leite, said in a presentation to the press that the sector expects a rush to stores starting this Tuesday, after the publication of the Provisional Measure by the federal government that promises to make cars, trucks and buses cheaper.

“The market must have a considerable growth by race of customers to make purchases with the announced discounts”, he said.

The presentation was accompanied by the vice-president of the Republic, Geraldo Alckmin, who stated that the government “is very optimistic with the response of consumers” and that discounts on vehicle prices will range from R$ 2,000 to R$ 8,000. The expected duration of the program is four months.

In the opinion of Milad Kalume Neto, director of business development at automotive consultancy Jato do Brasil, the term of the measure is short and the tendency is for it to be extended. He cited as an example for this the value of the tax incentive for the sale of cars, of 500 million reais.

“If we have 100% of sales concentrated in entry vehicles, we would be saying that the 500 million reais, with 8 thousand reais of discount, would cover 62.5 thousand vehicles in the period”, said Kalume Neto, citing that the sector is pressured by high interest and low credit.

The president of Anfavea stated that the expectation around the MP on discounting cars ended up “cooling” sales at the end of May, with consumers preferring to postpone the purchase.

Another effect of the expectation on the government’s announcement was an acceleration of production by automakers in May and with that the stocks had a jump last month, to 251.7 thousand units, compared to 206.1 thousand in April. However, according to Anfavea, of this volume, only 115 thousand units are eligible for the benefit approved by the government.

The organization assesses that, if it weren’t for the effect of postponing purchases, sales in May would have been 204,000 units, compared to 187,000 in May last year.

According to Anfavea, exports in May fell 3.7% year-on-year, to 44,300 vehicles, pressured by declines in the markets of Colombia and Chile. As a result, foreign sales accumulated a drop of 4.2% from January to last month, to 190.6 thousand units.