The president of Brazil's national automaker's association has said that the market is showing signs of stabilising, after months of sharp declines, according to media reports. Production fell 3.2% year on year (y/y) in June 2016, and is down 20.9% over the first six months of the year. Sales declined by 18.7% in June, also a lesser decline than in earlier months. Compared with May results, June production increased by 4% and sales by 3%. "It seems the market hit bottom which is positive because that means we should see the start of a recovery around the end of the year, gathering strength beginning next year," Anfavea president Antonio Megale is quoted as saying. The group has updated its forecast for 2016 to reflect a 19% drop in sales and 5.5% decline in production for the full year—including light and heavy vehicles. The report also notes that weak consumer confidence and high interest rates continue to pull demand down, however.
Significance: IHS Automotive forecasts a full-year decline in light-vehicle sales of 23.9%, falling to 1.88 million units. The market is forecast to see a very slow recovery, not reaching 2.5 million units until 2022. The long recovery is expected because the forecast for the economy is largely status quo for the next few years, meaning no drivers for light-vehicle sales. IHS economists forecast economic growth may not arrive before 2019. The potential for Brazil exists, but realising it will be a complicated process, more so with political uncertainty. In shorter term, there is more downside left in the market. IHS Automotive expects vehicle sales in the country to decline 3.4% in 2017 before returning to positive growth rates in subsequent years.
