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Auto Industry Shrinkage Accelerates in Brazil
Carmakers are bracing for at least 13% lower sales in Brazil this year as the country's economic malaise spreads, says Bloomberg News.
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Carmakers are bracing for at least 13% lower sales in Brazil this year as the country's economic malaise spreads, says Bloomberg News.
Last year industry trade group ANFAVEA predicted demand for cars and light trucks in Brazil would rise 1% to a record 3.6 million vehicles. Instead, volume dropped 8% to 3.3 million units.
ANFAVEA now expects 2015 sales to shrink to fewer than 2.9 million units. Consultancy Roland Berger says deliveries could plunge below 2.6 million this year.
Economists blame the contraction on a combination of economic recession, rising interest rates and an 11-year-high inflation rate. The downturn comes as many carmakers were completing expansions, such as the $1.3 billion Jeep factory opened last month in Pemambuco by Fiat Chrysler Automobiles NV.
Bloomberg figures Brazil's auto industry currently is carrying about twice as much capacity as the market demands. The news service notes that Ford, Suzuki and Volkswagen temporarily halted production in Brazil last month.
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