Brazilian state bank Caixa Economica Federal will offer carmakers and auto parts producers lower interest rates for investment and working capital, according to a Reuters report. The report says that Caixa president Miriam Belchior said the measures were the result of discussions with the auto industry and Brazil’s Trade and Development Ministry. Additionally, Reuters reports that Banco do Brasil is expected to unveil a similar rescue measures. Separately, regional reports suggest that BMW’s Araquari plant in Brazil will be completed on 30 September 2015, a year after the first vehicles rolled off the line. Production of the Mini Countryman, the last of five models being built there, also begins in September.
Significance: Brazil’s economy has been struggling, with the end to tax breaks and increased standard equipment making cars more expensive to buy. The short-term interest rates have continued to climb, reaching 14.25% in July. The government has been resisting supporting measures, as it struggles with significant debt and instituted austerity measures to address, impacting the automotive industry among others. Vehicle sales fell 21.6% in July, and IHS has reduced its full-year sales forecast to 2.53 million units for 2015, a decline of 23.9%. While Brazilian production is down 16.5% through the first seven months of 2015, BMW is forecast to produce 12,000 vehicles in its Araquari plant in 2015, with the largest volume going to the 3-Series. IHS forecasts production in the plant will reach 21,000 units in 2020 – still with the 3-Series accounting for most of the volume, followed by the X1, 1-Series, X3 and Mini.
