UPDATE 2-Brazil auto sales rebound in Dec, tough year ahead

Tue Jan 6, 2009 12:59pm EST
By Alberto Alerigi Jr.
SAO PAULO, Jan 6 (Reuters) - New car and truck sales in Brazil rose 11.5 percent in December from November, rebounding from two months in the doldrums as government tax breaks and year-end blowout sales wooed consumers back into showrooms, national dealers' association Fenabrave said on Tuesday.
For all of 2008, sales climbed 14.15 percent to a record 4.85 million vehicles, slowing slightly after three straight years of red-hot growth. In 2007, new car and truck sales soared 28 percent, buoyed by a credit boom that allowed many Brazilians to buy cars for the first time.
Sales had plunged 25.7 percent in November and 11 percent in October as the credit crunch and global financial crisis spilled over into Latin America's largest economy, crimping consumer demand and prompting several industries to scale back production and cut jobs.
Brazil is a major market for global automakers such as Italy's Fiat (FIA.MI), Germany's Volkswagen AG (VOWG.DE), U.S.-based General Motors Corp (GM.N) and Ford Motor Co (F.N). Asian and French manufacturers are also boosting their presence in Brazil, hoping to offset slumping sales at home.
Fiat led the pack in sales in December, finishing the year as the market leader with 24.6 percent market share. Volkswagen came in second with market share of 21.9 percent, followed by GM with 20.5 percent and Ford with 9.7 percent.
The strong numbers in December helped drive up Fiat's share price, which climbed 8 percent in Milan. Shares in tire maker Pirelli & C (PECI.MI) also got a boost from the data since Brazil is a key market for the Italian group, surging as much as 22 percent.
The rebound in auto sales came after Brazil's government slashed industrial taxes on new cars and reduced financial taxes on consumer loans, two of several steps it has taken in recent months to prevent a sharp economic slowdown.
Previously, the federal government and the Sao Paulo state government sought to shore up the auto industry by instructing state banks to offer a total of 8 billion reais ($3.62 billion) in credit for car loans.