Brazil 1st Half of August Vehicle Sales Slip 0.45% vs. July - Fenabrave

Date : 08/17/2012 @ 5:07PM
Source : Dow Jones News
Stock : Ford Motor Company (F)
Quote : 11.84  0.12 (1.02%) @ 4:00PM

Brazil 1st Half of August Vehicle Sales Slip 0.45% vs. July - Fenabrave

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SAO PAULO--Brazil's vehicle sales during the first two weeks of August retreated slightly from a strong month in July, even as they surged on the year, auto-dealer association Fenabrave said Friday.

Sales of cars and light commercial vehicles reached 169,859 units, a 0.45% decline from the first two weeks of July, but up 21% from the first two weeks of August 2011.

In May, Brazil reduced taxes and banks' reserve requirements tied to auto loans in an effort to boost sales. And boost sales it did, with June and July posting the strongest sales ever for the two months. With 364,000 vehicles sold, July saw the second-biggest single month of sales ever, losing only to December 2010, when more than 381,000 vehicles were sold in Brazil.

But with the tax breaks set to expire at the end of this month, the industry is concerned that sales will slump again, ending the year with little growth or possibly even a contraction. Though Finance Minister Guido Mantega has said there aren't plans to extend the stimulus measures, many in the industry are hopeful the government will see the benefits to industrial production that continued strong sales could pose, especially as industrial growth in Brazil falters.

Indeed, despite the strong sales of cars and light commercial vehicles, sales of truck continue to lag. During the first half of August, truck sales were down 34% from the year-earlier period, and fell 4.5% from an already-weak July. The government imposed tougher emission standards at the start of the year, but many buyers have spurned the new trucks--either because they rushed to buy the cheaper, higher-emission trucks before the tougher standards went into effect, or because a lack of gasoline stations carrying the low-sulfur fuel needed by the trucks has dissuaded potential buyers.

Looking at sales of cars and light commercial vehicles, Fiat SpA (FIATY, F.MI) once again was the market leader, accounting for 24% of vehicles sold. Volkswagen AG (VLKAY, VOW.XE) came in second, followed by General Motors Co. (GM) and Ford Motor Co. (F).

Write to Paulo Winterstein at paulo.winterstein@dowjones.com.

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