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Boom in car sales 'reflects overseas investment in Brazil'

Date added: 25th May, 2010 at 10:51
(view all articles from May, 2010)

Categories: Economy

Brazil is on course to become the fourth-largest market for vehicles in the world this year, according to the Financial Times, as a burgeoning middle class demographic in the country drives consumerism.

Currently the fifth-largest for car sales globally, after China, the US, Japan and Germany, carmakers and industry analysts expect the nation to surpass more developed countries in vehicle consumption, the newspaper said.

Economic expansion in the country has triggered a growth in demand for cars recently, which has continued despite the expiration of tax incentives introduced after the recession in 2008.

Volkswagen predicted a rise of seven per cent this year in Brazilian sales, more than it forecasts for its German activities, while General Motors (GM) expects a five per cent increase.

The Financial Times quoted Jaime Ardile, head of GM's Brazilian operation, saying: "We believe five per cent annual growth is sustainable for Brazil over the next five years, with some upside given by the soccer world cup in 2014 and Olympic Games in 2016."

Carmakers moving their production activities to the nation from overseas has grown, the information source reported, with some firms in the industry making their highest profits in the country and imports doing well.

Recently, Vitor Munoz, managing director of private equity investor Denham Capital, told the Financial News that such economic expansion creates a good opportunity for overseas investment in Brazil, particularly in infrastructure and property - assets that will be in greater demand as consumer spending increases. ADNFCR-1477-ID-19797227-ADNFCR