Brazil’s auto show is in full swing, but the auto industry brings huge worries image

This week Brazilians that have a passion for cars or just want to see up close the car they want to buy can head to the Sao Paulo Auto Show, but the automakers are increasingly worried as the market has seen its biggest decline since 1999.

The carmakers for years have seen the Brazilian market – thanks to the region’s strongest economy – as a true cornucopia. But recent months have brought a huge slowdown in car sales that left forecasts from many brands dangling mid air. And the industry observers and top executives fret the situation could go on for another year or more before showing any revival. The nation’s auto show is clouded by grey predictions, after the carmakers saw double-digit sales increases turn to three straight years of slumping deliveries.

Koji Kondo, Toyota’s chief executive in Brazil thinks “the market is in for a difficult time until 2016,” due to rising labor expenses, increased taxes and continued infrastructure problems. Tightening credit and a sharp decline in consumer confidence has led to sales of cars and light trucks falling so far this year by 9% compared to the first nine months of 2013.

Rogelio Goldfarb, Ford’s head of corporate affairs in the region thinks the problems in Brazil and the economic situation in Argentina could lead to 50% of unused production capacity across South America in 2015.

VIa Reuters