Brazil auto sales fall in August after record

Thu Sep 4, 2008 11:33am EDT
SAO PAULO, Sept 4 (Reuters) - Auto production and sales in Brazil fell sharply in August, the automakers' association Anfavea said on Thursday, as rising interest rates began to affect consumer demand.
Higher incomes and cheaper credit had driven car demand and made Brazil a major market for several international manufacturers in recent years.
Car sales fell 15.1 percent from July to 244,800 units, but were still up 4 percent over the same month last year, Anfavea said.
Rising car exports partially offset the slump in domestic sales. Manufacturers sold 67,900 units abroad in August, up 7.9 percent over July.
Production was down 1 percent from July at 314,700 units, but still up 12.6 percent year-on-year.
In August, 86.7 percent of all new cars sold were equipped with flex-fuel engines, which run on either gasoline or cane-based ethanol, or any combination of the two.
The central bank has increased its benchmark lending rate by 175 basis points since April and some analysts say could increase it by as much again this year.
The country's car market is dominated by global automakers such as Italy's Fiat (FIA_p.MI: Quote, Profile, Research, Stock Buzz), Germany's Volkswagen AG (VOWG.DE: Quote, Profile, Research, Stock Buzz), U.S.-based General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz), followed by Japanese and French manufacturers.
Metalworkers at Volkswagen, Renault and Nissan voted on Thursday to continue a four-day strike, which they said was partially affecting production. (Reporting by Vanessa Stelzer, writing by Raymond Colitt, editing by Maureen Bavdek)