Anfavea increases projection for the year


Last Friday, the Brazilian Automotive Association (Anfavea) updated all projections for the industry this year. Domestic vehicle sales are expected to grow 24.5%, at 3.060 million units. The former forecast was of 17.5% hike per annum. A total of 2.645 million cars will be manufactured in Brazil and 415,000, imported, 21% and 49.8% up from 2007.

“The industry reached a new level of sales. Until May last year, monthly sales did not exceed 200,000 units. Since then, we have reached about 230,000 car licenses,” stated Anfavea’s president, Jackson Schneider. The executive said that the sector is now undergoing a continuous healthy long-term expansion, and that from now on, growth will be less significant.

From January to May this year, car sales grew 30.3% in relation to the same period last year, totaling 1.151 million units (record in the industry). Anfavea also updated the production growth for this year from 8.9% to 15%, achieving 3.425 million vehicles. So far this year, car production was also record high: 1.380 million cars, 21% higher year-on-year.

According to Schneider, the industry is capable of producing 3.85 million vehicles this year, may reach 4 million in 2009, and exceed 5 million cars per year in up to five years. In this year alone, car assemblers will invest US$ 5 billion to increase capacity and the whole auto chain, including auto parts, is expected to invest US$ 20 billion by 2011. “And more investments will be announced this year,” added Schneider.

Schneider showed no concern about the higher interest rates in the industry (from 20.7% in April, 2007 to 21.1% in April this year) nor about the year-on-year increase in bad debts (from 3.2% to 3.4%). Such rate is still within the target for overall bad debts. This was the first time the industry interests went up this year following, according to Schneider, the two last increases in the Selic rate. “It will go up further, because the future market interest curve is going up,” he added.

Still, Schneider considered that Selic hikes have not affected the market to the point of breaking the continuous growth. He also disregarded any concerns about inflation by considering them “under control”. The automotive industry closed May with a 26-day inventory, against 22 days in April; and 661 job positions created in the months, coming to 126,531.

AGREEMENTS. Anfavea’s president celebrated the automotive agreement recently entered into between Brazil and Argentina for five years and for which each dollar imported by Brazil in cars from Argentina, the former will be entitled to export to Argentina US$ 1.96 exempt from tariffs. On the other hand, for each dollar imported by Argentina in cars from Brazil, that country will be entitled to export to Brazil US$ 2.50. According to the executive, the tariffs are considered to be within the dynamics of both markets.

“The agreement is good and brings benefits to both countries. We are very pleased,” said Schneider. He was also satisfied with the Pró Veículo (pro-vehicle) program, signed some days ago by the Governor of the State of São Paulo, allowing the use of credits of the ICMS (Tax on the Circulation of Goods and Services) in investments to expand the industry in the state. Schneider disagreed that the industry has received VIP treatment.

“The State Government is creating programs for each separate industry as it has already done for ceramic and aviculture. The system is very positive and will foster business investments in the state,” said Schneider. He only criticized the recent study by the Research Institute for Industrial Development (Iedi), according to which the automotive industry will have more tax reliefs than the others in the new Government’s industrial policy. “There is a mistaken concept. The benefit is horizontal, for all. Those investing more will have more benefits,” added Schneider.

Anfavea’s president also reviewed the projections for vehicle exports this year. Whereas a 5.1% decrease was expected for volume and maintenance of values sold abroad, the entity now believes that the number of cars exported will only be reduced by 1.0% this year: down to 780,000 units; whereas there will be a 7.4% hike in value: to US$ 14.5 billion. From January through May, exports fell 4.1% in units to 300,600 and went up by 10.6% in value to US$ 5.618 billion.

In the executive’s opinion, the review of such forecasts is due to the high demand of some Latin American countries such as Argentina, Venezuela, Colombia, Chile, and Peru, and to the sale abroad of higher value-added units like agricultural machines and trucks – influenced by the high prices of commodities -, in addition to buses. On the other hand, Anfavea also reviewed the increase of imports this year (from 43.6% to 49.8%) by 415,000 vehicles, not only because of the exchange rates, but also because some car manufacturers have transferred production to Argentina.

Other forecasts that underwent changes by Anfavea were the sales of agricultural machines (expected at 53,100 this year) with a 38.6% hike year-on-year, and the production of such machines, totaling 850,000, with a 30.8% hike in relation to 2007. Formerly, Anfavea projected 14.9% growth in the licensing of agricultural machines and 9.5% in production. From January through May this year, the sales of such units went up by 52.8% (to 20,300), and production went up by 41.5%, in the total of 32,500.

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