UPDATE 1-Brazil auto sales seen falling 19 pct in 2009

Thu Dec 11, 2008 12:37pm EST
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SAO PAULO, Dec 11 (Reuters) - New car and truck sales in Brazil are expected to fall 19 percent in 2009 as Latin America's largest economy slows and credit remains tight, the national dealers' association Fenabrave said on Thursday.
Fenabrave predicted that sales will total 2.155 million units next year, down from an expected 2.66 million in 2008, when sales should rise 13 percent.
The gloomy forecast comes after auto sales in Brazil slumped dramatically in October and November amid a severe credit crunch and dwindling consumer confidence, prompting automakers such as Fiat (FIA.MI: Quote, Profile, Research, Stock Buzz) and General Motors Co (GM.N: Quote, Profile, Research, Stock Buzz) to put thousands of workers on leave and scale back production.
The slowdown follows three years of torrid growth in Brazil's auto market, prompting automakers from around the globe to pour billions of dollars into the South American country to boost capacity.
"Besides interrupting the growth cycle, we're going to see a brutal drop in sales next year," Sergio Reze, Fenabrave's president, said in a statement. "But, depending on what measures the government takes, the drop in 2009 could be smaller."
The federal government and the Sao Paulo state government have sought to shore up the auto industry by instructing state banks to offer a combined 8 billion reais ($3.48 billion) in credit for car sales.
But only a portion of that amount has been made available so far, forcing automakers to resort to blow-out sales in a bid to reduce bulging inventories.
Brazil is a crucial market for automakers such as Italy's Fiat, Germany's Volkswagen AG (VOWG.DE: Quote, Profile, Research, Stock Buzz), U.S.-based GM and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz). Asian and French manufacturers are also boosting their presence in Brazil, a vast country where most people don't own cars. ($1 = 2.30 reais) (Reporting by Todd Benson; Editing by Derek Caney and Brian Moss)