Brazil car sales fall in July due to inventory shortages at dealerships

RIO DE JANEIRO, BRAZIL – Automobile sales in Brazil fell to 123,579 units in July, down 8.41% compared to the same month of 2020 (134,927); products are in short supply at dealerships because of the shutdown of several factories affected by the global shortage of semiconductors.

According to data released this Tuesday by the National Federation of Vehicle Dealers (Fenabrave), car sales in July, the lowest for the month since 2005, also fell in comparison with June by 7.30% compared to the 133,306 units sold the previous month.

July’s result put an end to the recovery that sales had been experiencing this year, compared to 2020, when they suffered a sharp drop as a consequence of the economic crisis generated by the Covid-19 pandemic.

Despite the sharp drop in July, accumulated automobile sales in the first 7 months of the year in Brazil stood at 927,735 units, equivalent to a 20.2% rise compared to the same period in 2020 (771,821).

Fenabrave attributed the negative result in July to the shortage of cars in dealerships and the difficulty of the Brazilian industry to continue manufacturing due to the global lack of chips.

Several Brazilian manufacturers temporarily halted their production or granted collective vacations to their employees due to the impossibility of continuing production due to the lack of some essential parts.

Although Brazil manufactured 1,148,500 vehicles in the first half of the year, with a growth of 57.5% compared to the same period in 2020 (729,300 units), factories began to reduce their production in June.

Brazilian vehicle production was limited to 166,947 units in June, down 13.4 % versus May (192,800) and its lowest level in 12 months, according to data released last month by the National Association of Vehicle Manufacturers (Anfavea).

“We had recovered after the pandemic and had been producing almost 200,000 vehicles per month, but in June, only 166,900 units were manufactured due to the impact of the lack of semiconductors,” admitted Anfavea’s president, Luiz Carlos Moraes.

Moraes said that this problem is expected to continue until the middle of next year, forcing Anfavea to revise its production projections for this year.

Brazil’s vehicle manufacturing fell from 2.95 million units in 2019 to 2.01 million in 2020 due to the pandemic. The employers’ association estimated that, with this year’s recovery, manufacturing would increase by 25%, to 2.52 million in this year’s recovery in 2021.

But the new projection is that Brazilian vehicle production will only grow by 22% this year, to 2.46 million vehicles.

The shortage has been less in heavy vehicles, which prevented sales from plummeting completely in July.

According to Fenabrave, vehicle sales in Brazil in July, including cars, light commercials, trucks, and buses, stood at 175,454 units, down 3.83% compared to the same month last year (182,442) and up 0.57% compared to June (174,454).

For the first 7 months of the year, car sales rose by 27.09 %, from 983,136 vehicles in 2020 to 1,249,463 in 2021.