By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazil’s automobile industry has beaten its own sales record for the fifth year running, bettering sales figures for the previous year, and making it the fifth biggest car seller in the world, market sources have revealed. Although lower than expected, the figures are particularly good in light of the implications of ongoing financial troubles in Europe and the U.S., and a painful tax hike on imported vehicles.

Ford EcoSport, unveiled in Brasília in January 2012, photo by Wikimedia Licence Attribution/Rahulmalik13.
More good news: Ford's new EcoSport Concept, to be produced in Brazil, was unveiled last week, photo by Wikimedia Commons License/Rahulmalik13.

Some 3.63 million vehicles, including cars, vans, trucks and buses were sold, according to figures released by Fenabrave, Brazil’s National Vehicle Distribution Federation, 3.6 percent up on the 2010 total.

The 2011 figure includes over 3.4 million car and light vehicles sold, up nearly 2.9 percent on the previous year. However, the results were lower than some had expected, and December’s car and light vehicle sales were actually down 8.9 percent year-on-year.

Blame is being leveled partly at the introduction of a Brazil’s stinging tax increase on imported vehicles, which came into effect in the middle of the month.

The tax represents a thirty percent increase in the IPI (tax on industrialized products) and is set to run until the end of 2012.

The increase in IPI on imports, a cooler GDP forecast, and other measures taken by the government to curb inflation and rising interest rates – coupled with the ongoing financial woes faced by European countries – have taken their toll on the market, analysts say.

But despite the results, Fenabrave says it predicts a market increase of some 4.5 percent this year. Fenabrave president Flávio Antonio Meneghetti says that the pace of growth in the second half of 2012 will be greater than that in 2011, accelerated by a reduction in the amount of debt in the country and a rise in the rate of the minimum wage.

This more positive news for Brazil’s automobile industry has been brightened further by car giant Ford, which unveiled a new version of its EcoSport SUV last week in the Brazilian capital – to be produced initially in Brazil and India, and the company expects an annual output of over two million units by around 2015.

Ministers Guido Mantega, Fernando Pimentel and Aloizio Mercadante announce a 30-percent increase on IPI for imported cars in 2011, Brazil News.
A 30 percent increase in IPI for imported cars introduced by the government in 2011 is partly being blamed for lower-than-expected vehicle sales, photo by Fábio Rodrigues Pozzebom/ABr.

The new model (pictured above) is said to be a more aerodynamic version of the one it has been producing in the northeast of Brazil since 2003, a statement from the company read.

Ford expects the SUV to be sold in nearly 100 countries worldwide, with a focus on emerging market in Latin America and Asia.

In October 2011 French-Japanese car manufacturers Renault-Nissan announced that they would be expanding in Brazil, by opening a second manufacturing plant in Rio de Janeiro state and expanding production at a current plant in Paraná.

The group said they were keen to become a prominent player in the Brazilian market, and hoped Brazil would become the number two market for Renault after France.

But some economists are warning that 2012 might not be all plain sailing for Brazil and that the country is not immune from Europe’s and other countries’ ongoing financial troubles.



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