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Customer LoginsBrazilian light-vehicle sales and production drop in March, exports continue decline
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Brazilian light-vehicle (LV) sales dropped 0.2% year on year (y/y) to 199,974 units in March but increased 10.1% y/y in the year to date (YTD), according to data from the National Association of Motor Vehicle Manufacturers (Associação Nacional dos Fabricantes de Veículos Automotores: Anfavea). Brazilian light-vehicle (LV) registrations increased 13.8% in 2018. In the first two months of 2019, the trajectory of light-vehicle sales continued upwards, but March brought a small decline, although we believe that the drop was related to the Carnival season falling in March this year, so there were fewer business days than in March 2018, and was not an indicator of any change in market's course. Compared with February's performance, LV registrations increased 5.2% in March.
The combination of flat sales, fewer working days, flooding at certain plants, and a short strike at another plant held LV production back in March, and it declined 9.5% y/y, according to data from Anfavea. After falling significantly in 2016, LV registrations rose 9.4% in 2017 and 13.8% in 2018, and have started off as expected in 2019. LV sales have shown strength on improved credit availability, which continued to improve in 2018 as Argentina's market declined. While the LV sales improvements were enough to offset export declines and result in a net gain in production in 2018, production in 2019 is down in the YTD, with weak exports a factor.
Brazil's LV exports increased throughout 2017 as the country strengthened its trade agreements, although exports declined in the second half of 2018 as sales in Mexico and Argentina declined, and this trend continued in the first quarter of 2019; sales in Argentina are forecast to continue to decline sharply in 2019. In March, Brazil's LV exports dropped 63.2% y/y, after falling in 10 out of 12 months in 2018.
Outlook and implications
Increases in credit availability continue to support sales gains in the Brazilian LV market; sales in 2018 reached 2.47 million units and are forecast to increase 10.3% to 2.71 million units in 2019. March's results reflected the impact of the Carnival season on sales, although exports continued to be affected by declining sales in Argentina and Mexico. IHS Markit forecasts LV sales will not break 3.0 million units until 2021. After that, IHS Markit expects a stronger recovery, with sales forecast to reach 3.63 million units in 2026.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.