Brazilian LV registrations grow over 13 percent in May
Brazilian light-vehicle registrations increased by 13.7% y/y in May, according to initial registration data from the National Federation of Motor Vehicle Distributors (Federacio Nacional da Distribuicao de Veiculos Automotores: Fenabrave). The group reported registration of 194,922 light vehicles in May 2018, compared with 190,115 units in May 2017, although this was up 7.2% compared with April 2018. Registrations of medium and heavy commercial vehicles (MHCVs) and buses rose 38.8% y/y in May 2018, after closing 2017 up 5.1%. May results saw 6,958 units sold, compared with 5,436 units in May 2017. The Selic interest rate was cut for the first time in four years in mid-October 2016 (from 14.25% to 14.0%). Rate cuts have continued, with the most recent drop to 6.50% in March 2018; in May 2018, the bank left the rate unchanged. Regarding automaker results, best-seller General Motors' (GM) market share stood at 16.6% in May, down from 19.3% for light-vehicles in January. VW stayed ahead of Fiat for another month, improving to a 15.2% share. Fiat's share came in at 13.7%, similar from 13.4% at end 2017. Ford's share slipped slightly to 9.39% from 9.8% in March. Hyundai was in sixth with an 8.6% share. Fenabrave reports that the Chevrolet Onix remained the best-selling passenger car, with 15,015 units registered in May 2018. The Fiat Toro and Strada pick-up trucks swapped first position in the LCV category over the course 2017, with the Strada holding the lead at the end of the year and keeping it over the first five months of 2018, with 5,581 units registered in May.
Significance: Brazil's automotive market struggled from 2014 through 2016 with an economy marred by recession, lack of credit availability, and high unemployment. However, both light- and medium/heavy-duty markets returned a positive result in 2017 and a strong start to 2018. Results in May continue the positive trajectory set in the first quarter of the year, although at a slower pace than in April 2018. Some of this strength may ultimately be attributable to a delay in replacing the IPI tax, which is not resolved at time of writing. Contributing to light-vehicle sales improvements has also been increased credit availability, driven by one bank which wants to increase its presence in Brazil. Additionally, there has been a drastic push of direct sales and growth in fleet volume. IHS Markit forecasts a 12.8% increase in 2018, which will follow the 9.4% gain in 2017 and a much better position than the 19.9% decline in 2016. IHS Markit forward projections for Brazil now reflect more of a V-shaped recovery. IHS Markit projects sales gains through 2025, including the increase in 2018. We will provide a full report of sales, export, and production data based on the report from Brazil's National Association of Motor Vehicle Manufacturers (Associação Nacional dos Fabricantes de Veículos Automotores: Anfavea) when data becomes available.
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