Rising imports halt Brazil’s auto production; exports up 14%

A report released by the Brazilian Association of Automobile Manufacturers (ANFAVEA) indicates that in October, the domestic market grew by 10.2%, exports by 14%, and inventories remained stable, but auto production in Brazil did not follow this trend, experiencing a contraction of 4.4%. The significant increase in imports explains this phenomenon. In the first ten months of the year, 271.3 thousand foreign models entered the country, 57.6 thousand more than in 2022, an increase of 27%.

Auto production in Brazil reached 199.8 thousand vehicles in October, 4.4% less than in September. Year-to-date, the industry totals 1,951 thousand units, 11 thousand less than in 2022, a decrease of 0.6%. The most significant declines are in the truck (-37.8%) and bus (-35.2%) segments due to rising costs caused by new mandatory emission control technologies and strong anticipation of purchases that occurred at the end of last year.

Despite the decline in heavy vehicle production, there is good news in sales. Bus registrations reached 17.4 thousand, the same volume as last year. Trucks grew by 7.7% in October but are still 14.9% below year-to-date levels compared to 2022.

Total vehicle sales reached 217.8 thousand units, 10.2% more than in September, with a cumulative increase of 9.7%. It was the second-best month of the year in registrations and daily sales average, behind only July, the month of discounts incentivized by the federal government. The daily average of 10.4 thousand units is approaching the pre-pandemic level, around 11 thousand vehicles per day. The passenger car segment was the fastest growing (12%), driven by a 29% higher demand from rental companies.

After September, the worst month of the year, exports resumed growth but were still below the average of the first half and previous years. Shipments of 31.3 thousand units in October represented an increase of 15.4%. However, year-to-date, this critical indicator is 12.8% below the first ten months of the previous year, with 354.2 thousand units shipped.

Machinery Sales Projection

With the reduced prices of major commodities, adverse weather events, delays in financing, and high sales volumes in the last two years, ANFAVEA revised agricultural machinery sales to a 10% decline for the year, worse than the 3.5% contraction projected at the beginning of 2023. The forecast for a reduction in exports was maintained at 13.1%.

In the case of road machinery, the long-awaited announcement and operationalization of the PAC, combined with low demand from agricultural properties, led to projections of a 4.7% decline to 24% for the year. The initial export forecast was also maintained, with an expected increase of 11.3% over the volumes obtained in 2022.

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