Due to increased auto sales in Brazil, output reached record levels in April after the government extended the tax cuts until the end of 2013.

As the government extended tax cuts until the end of this year, this alleviated concerns that Brazil’s industrial production will be affected by a difficult global economic environment. Sales in April increased 18% to 333,738 units compared with March and 29% compared with April 2012, when sales were taken down by an increase in auto-loan defaults which led to a contraction of auto credit. During the first four months of this year sales increased 8.2%.

In May 2012, Brazil’s government decided to cut the so-called IPI tax on auto sales after sales jumped, which helped turning the sales drop in the first half of the year into an increase of 4.6% by the end of the year. These tax cuts support the nation’s auto industry, which accounts for 5% of Brazil’s gross domestic product and 20% of the industrial output.

In April automakers increased production by 30.7% to 340,865 units, a record for the auto industry, which represents a rise of 6.8% over March output. Heavy trucks and buses production also recovered, with truck output up in April 57% and 44% during the first four months of the year.

Source: wsj.com


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