August auto production rises in Brazil image

The auto production rose this August in Brazil but the slight gain does not seem to offset the concerns over an industry crisis. That is due to a sluggish local economy, weak consumer confidence and a decline in exports.

Car and truck production rose 5.3%, while sales went down 7.6% from July. Production dropped 22.4% from 2013 and sales slid 17.2%. With a lag in sales, Brazil’s auto industry, making up a fifth of the country’s manufacturing output, has cut down on its production.

Even if President Dilma Rousseff, who is seeking re-election in September, helped the auto industry with tax breaks and cheap credits, they were reduced this year to ease the federal government’s strained budget.

The Brazilian auto industry also cut its workforce by almost 5% from January to June as domestic demand decreased. A drop in exports also affected the industry. In August, exports went down a massive 50.6% from a year earlier and are down 38.1% in the year, as total exports for 2014 counted 235,400 vehicles.

Brazil is the world’s fourth biggest auto maker and an important base of operations for car brands like Fiat SpA, Volkswagen AG, General Motors Co and Ford Motor Co.

Fiat remained Brazil’s best car and light trucks seller in August, with almost 56,200 new registrations, while Volkswagen took the second spot with 48,430 passenger units sold, followed by GM with 38,800 cars and light trucks sold and Ford with around 22,600 vehicles.

By Gabriela Florea