Car sales fall and automakers go to Brasilia

Before the backdrop of accommodation in domestic consumption, decline in exports and stocks in the more critical level since the financial crisis of 2008, automakers take the difficult moment lived by the industry to a meeting this morning with President Dilma Rousseff.
The audience between Dilma and Anfavea, an organization that represents the manufacturers of vehicles, is scheduled for the 9:30 at the Presidential Palace. Luiz Moan, President of the Association, arrived yesterday to Brasilia to attend the meeting, but the invitation has also been extended to other industry leaders. At the hearing today, they should talk about situation and prospects of the sector.
Since he began his term in January 2011, this is the first time that the President calls auto industry executives to a meeting. Other times, rousseff reached receive separately, Presidents of automakers to launch investment projects.
The meeting takes place at a time when vehicle sales deepen the trajectory of fall that began in March. After closing the first quarter on 2.1%, the accumulated fall in vehicle plates issued in Brazil-between passenger cars, SUVs, light trucks and buses-has already reached 3% this month.
In the first fortnight of April, sales were 7% below the volumes of the same period last year, although they have shown evolution of 11.7% compared with the poor performance of the first 15 days of March, when the result, however, was hindered by the Carnival holiday.
The fall in consumption follows the increase in car prices from the withdrawal of part of the discounts in the tax on industrialized products (IPI), along with the mandatory installation of airbags and antilock brakes, to encareceram vehicles. At the same time, banks follow selective in releasing credit and the consumer, more indebted, is less prone to buy new car. To top it off, the truck assemblers suffered in the first three months of the year with the slowness in the release of funds from the Banco Nacional de Desenvolvimento Econômico e Social (BNDES) to capital assets-a situation which the Government tries to resolve to simplify the approval of credit again.
Automakers plan to put all these points on the table during the hearing with the President Dilma, but, according to sources, the meeting should address, in particular, the alternatives to restore exports to Argentina. The two countries have been negotiating since the end of March out to unlock the flow of bilateral trade, which may include the creation of a special credit line for exports of vehicles to the neighboring country.
In the first round of meetings with automakers to deal with it, the operationalization of this funding was the main topic discussed at the meeting that the Anfavea had on Tuesday in Sao Paulo, with the Finance Minister, Guido Mantega. At today's meeting at the Presidential Palace, Mantega will be represented by its Executive Secretary, Paulo Rogério Caffarelli.
One of the springs of propelling vehicles production record of last year, exports to Argentina-target of four to five cars shipped in Brazil-have fallen precipitously with the restrictions on imports of the Government of Cristina Kirchner. The crisis in the MERCOSUR partner, combined with the drop in domestic demand, are causing cuts in vehicle production.
The last adjustment was announced by Fiat, which gave, at the beginning of the week, holidays to 800 workers at the factory of Betim (MG) to adjust inventories. In total, the volume of vehicles parked in courtyards of automakers and dealers closed March level equivalent to 48 days of sale, the highest level since November 2008, at the height of the international crisis. At the time, the stockpile was turning in 56 days.
Despite the negative impact caused by the tax increase at the turn of the year, there is no prospect, according to sources, that the new round of IPI replenishment, scheduled for July, to be negotiated at today's meeting.