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Brazilian light-vehicle registrations increase in September

08 October 2018 Stephanie Brinley, MBA

IHS Markit perspective

  • Implications: Light-vehicle (LV) registrations in Brazil increased by 5.8% y/y in September, and are up 13.1% in the YTD. Over the first nine months of 2018, LV exports have now dropped 8.2% y/y, while production has risen 9.6% y/y.
  • Outlook: Brazilian LV registrations continued to climb in September, though at a reduced pace of 5.8% y/y. September's production decreased y/y, impacted by declines in exports, though there remains growth in the YTD. The IHS Markit full-year forecast is unchanged, and projects Brazil will see sales of 2.4 million units in 2018, up 10.3% from 2017. LV exports remain soft, in part on a weakening Argentinian market. IHS Markit forecasts Brazil's LV production will reach 4.1 million units in 2026, compared with a forecast of 2.88 million units in 2018. Brazil's market is seeing a V-shaped recovery, rather than the U-shaped recovery previously expected.

Light-vehicle (LV) registrations continue to improve in the Brazilian market, with a 5.8% year-on-year (y/y) increase in September, while production fell 7.4% y/y, and exports continue to decline, according to data from the National Association of Motor Vehicle Manufacturers (Associação Nacional dos Fabricantes de Veículos Automotores: Anfavea). After falling significantly in 2016, LV registrations began improving in 2017, rising 9.4%, and continue to do so in 2018. Over the first nine months of 2018, LV sales are up 13.1% y/y. LV sales have shown strength on improved credit availability, with double-digit percentage gains during most of the second half of 2017 and an ongoing improvement in 2018. A one-off truckers' strike in May only temporarily held the market back, and it has since recovered. LV exports, though declining, have combined with local sales to support production improvements in most months and on a year-to-date (YTD) basis, despite September returning a decline in LV production.

LV exports increased throughout 2017 as the country strengthened its trade agreements, although exports in 2018 have been more erratic as sales in Mexico and Argentina are increasingly under pressure. Anfavea reported that September saw exports to Argentina drop to 50% of Brazil's total LV exports, notably below the typical rate of between 70% and 75%.

Outlook and implications

Brazilian light-vehicle registrations continued to climb in September, though at a reduced pace of 5.8% y/y. September's production decreased y/y, impacted by declines in exports, though there remains YTD growth. The IHS Markit full-year forecast is unchanged, and projects Brazil is forecast to see LV sales of 2.4 million units in 2018, up 10.3% from 2017. LV exports remain soft, in part on a weakening Argentinian market. IHS Markit forecasts Brazil's LV production will reach 4.1 million units in 2026, compared with a forecast of 2.88 million units in 2018. Brazil's market is seeing a V-shaped recovery, rather than the U-shaped recovery previously expected. IHS Markit has revised its forward projections for Brazil's market, forecasting LV sales will not break 3.0 million units until 2021. After that, IHS Markit expects a stronger recovery, with sales forecast to reach 3.67 million units in 2025. The potential for Brazil is there, but getting there will be a complicated process.

Posted 08 October 2018 by Stephanie Brinley, MBA, Principal Automotive Analyst, IHS Markit


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