Brazil automakers raise sales forecast for 2008

Thu Jun 5, 2008 12:12pm EDT
SAO PAULO, June 5 (Reuters) - Brazil's national automakers' association on Thursday raised its sales and production forecasts for 2008, citing red-hot demand as a booming economy and steady credit growth let more Brazilians buy cars.
The association, known as Anfavea, said auto sales are on track to jump 24.2 percent this year to a record 3.06 million units. It had previously forecast that sales would rise 17.5 percent in 2008 to 2.895 million units.
Total auto output in Latin America's largest country should rise 15 percent this year to an all-time high of 3.425 million units, up from a previous estimate of an 8.9 percent increase, Anfavea said.
Even with domestic demand for new cars stretching production capacity to the limit, Anfavea said exports of cars and trucks made in Brazil are still on course to grow 7.4 percent in 2008, reaching $14.5 billion.
In the first five months of the year, auto sales in the country are already up 30.3 percent and production rose 21 percent, Anfavea said.
Brazil's automobile market has been one of the main beneficiaries of an economic revival that has lifted millions of Brazilians out of poverty into the middle class, with many taking out loans to buy cars for the first time.
The country's car market is dominated by global automakers such as Italy's Fiat FIAT.MI, Germany's Volkswagen AG (VOWG.DE: Quote, Profile, Research), U.S.-based General Motors Corp (GM.N: Quote, Profile, Research) and Ford Motor Co (F.N: Quote, Profile, Research), followed by Japanese and French manufacturers.
Both GM and Ford are doing so well in Brazil that their operations here are helping to offset major losses at home in the United States, where the soaring price of gasoline is forcing automakers to rethink their business models.
In Brazil, almost 90 percent of all new cars sold are equipped with flex-fuel engines, which run on either gasoline or cane-based ethanol, or any combination of the two. As a result, the recent surge in oil prices has had little impact on the country's auto market. (Reporting by Alberto Alerigi Jr., Writing by Todd Benson; Editing by Jan Paschal)