Brazil is stagnating, but production and exports are increasing

With so many variables affecting the Brazilian economy, last year’s results were characterized by flat sales, a slight increase in production and solid exports, writes Fernando Calmon.

Sales of cars, pickups, vans, trucks and buses fell by 0.7% to 2,104,461 registered units in 2022.

Cars and buses performed slightly better than 2021, but trucks and light commercial vehicles detracted from the overall results.

Overall sales were down 32% from the 2.788 million registrations in 2019 before the Covid pandemic.

December was the busiest month for sales in 2022 with 216,900 units registered, up 4.8% year-on-year.

Brazil is the third largest world market after China: 26.757 million vehicles (+1.7%) and Germany: 2.651 million (+1.1%) Brazil: 2.104 million (-0.7%) and ahead of Great Britain: 1.614 million (-2 %) South Korea: 1.388 million (-3.1%) Spain: 0.813 million (-5.4%) Japan: 4.201 million (-5.6%) United States: 13.858 million (-7.6%) France: 1.529 million (-7.8%) and Italy: 1.456 million (-9.6%)

(Data refer to motor vehicles of all categories for China, Japan and Brazil; light vehicles for the United States; and cars for Europe and South Korea.)

Anfavea predicts a difficult 2023 for domestic sales due to similar obstacles in 2022 such as high interest rates, constraint on consumer credit, low economic growth corroding purchasing power inflation, and upcoming (albeit minor) chip supply and logistics chain problems.

Nonetheless, for this year it has predicted a 3% increase in sales (to 2,168 million units), 4.1% for the light vehicle segment and a 11.1% decline for heavy vehicles.

Fenabrave, lobbying for 52 dealer associations, estimates that cars, light commercial vehicles, trucks and buses will see no growth in 2023, although buses alone will grow by 5%.

The vehicle sector, excluding motorcycles and tractors, is growing at just 0.1% a year.

In terms of production, 191,500 units rolled off assembly lines in December for a full year total of 2.37 million units, up 5.4% from 2021 and beating Anfavea’s forecast of 4%.

Fewer production stops in the second half of the year with partially improved but insufficient supplies of electronic components contributed to this.

Production expectations for this year are up 2.2% to 2.4 million units, with cars and light trucks up 4.2% but trucks and buses down 20.4%. The heavy segment will suffer from changes in emission regulations that will lead to inevitable price increases.

Exports were the most positive indicator of the Brazilian automotive industry in 2022.

The forecast was for a 22% expansion, but the 480,900 exported were up 27.8% from 2021.

Unsurprisingly, given the foreign trade restrictions imposed by economically struggling Argentina, Brazil’s largest trading partner.

This was all offset by reasonable shipment growth to all Latin American countries, particularly Mexico, Colombia and Chile, which enabled the good annual result.

By value ($10.444 billion), exports grew even more, up 37.6%, driven by shipments of higher value-added vehicles such as SUVs, trucks, and buses.

A slight decline of 2.9% (still impacted by Argentina) to 467,000 units is expected for 2023.


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