Auto output in Brazil slightly up in May 2013 thanks to tax breaks

Article by Anita Panait, on June 7, 2013

Auto production in Brazil surged 0.3 percent monthly to a new record in May 2013 to 348,100 new cars, trucks and buses as carmakers took advantage of tax breaks on locally produced vehicles, according to national automakers association Anfavea. The increase in production actually came despite carmakers having to deal with one less workday in May, which resulted to a 5.2 percent sales drop.

Acting on worries that weak demand was impairing the automotive sector that accounts for a quarter of Brazil’s industrial output, President Dilma Rousseff imposed tax breaks in May 2013 for locally built cars and trucks. The Brazilian government has also extended the tax breaks until the end of 2013, hoping to encourage demand for locally built cars and trucks.

Over 60% of the Brazilian vehicle market -- the fourth-largest in the world -- is dominated by Fiat S.p.A., Volkswagen AG, General Motors Co. and Ford Motor Co. Despite a 2-percent decline in new vehicle registrations (67,846) in May 2013, Fiat managed to remain as the best-selling carmaker in Brazil.

At far second in the month of May with 53,868 new registrations is VW, closely followed by GM with 53,824 cars and light trucks. Ford, meanwhile, sold 27,545 vehicles in Brazil in May 2013, followed by Hyundai Motor Co. (19,091 vehicles) and Renault SA (18,110 units). [source: Reuters]

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