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Brazil Auto Sales Dip in 2014

January 06, 2015

Vehicle sales in Brazil dropped last year despite hefty government incentives, as a weak economy weighed on consumer confidence, according to a Wall Street Journal report.

Sales of cars and light vehicles totaled 3.32 million units in 2014, down 6.9 percent from the prior year, according to the national auto-dealership association, Fenabrave, on Tuesday. This marked the second-consecutive annual decline for car sales in Brazil, according to the WSJ.

Brazil’s gross domestic product grew at a projected level of just 0.15 percent last year. Meanwhile, annual inflation is running near 6.5 percent, near the top of the government’s tolerance band, according to the report.

For 2015, it could be equally tough for automakers, according to the WSJ report. Under pressure to balance its books, Brazil’s government allowed a consumer tax break on new-car purchases to expire at the end of 2014. Resumption of the tax, known as IPI, will raise the prices of new vehicles between 4.5 percent and 7 percent.

The largest auto makers in Brazil in terms of sales are Fiat SpA, Volkswagen AG, General Motors Co., and Ford Motor Co., according to the report.

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