Marli Moreira
Reporter - Agência Brasil

São Paulo - The automobile industry began 2006 commemorating the results of domestic car sales in December, a month the sector regards as exceptional, with 183.6 new vehicles being licensed. This is the best result obtained by the assembly plants installed in Brazil for the month of December since 1997, when the number exceeded 189 thousand units. December's figure represents a 3.2% increase in relation to December, 2004, and a 16% increased in comparison with November, 2005.

"The domestic market displayed renewed force in the fourth quarter, and this permitted us to record the best performance in the last eight years," observed Rogélio Golfarb, president of the National Association of Automobile Manufacturers (ANFAVEA). 1.72 million new vehicles were licensed in Brasil in 2005, 8.6% more than in 2004, when domestic sales attained 1.57 million. In Golfarb's opinion, the good performance can be attributed to the country's favorable economic situation. "Everything points to economic growth, and this result represents a combination of factors," he pointed out, mentioning reductions in the annualized benchmark interest rate (Selic), the Long-Term Interest Rate (TJLP, used in loans for capital goods), and the Brazil risk premium, as well as the control of inflation.

The executive highlighted the impressive participation of low-priced vehicles, which represent over half the sales (57%), and the demand for flex-fuel vehicles (71%). Since they were introduced on the market in March, 2003, 1.2 million flex-fuel vehicles, which can consume either gasoline or alcohol fuel, have been sold. Golfarb said that the current concern is with exports. During the course of 2005, the sector complained about losses caused by fulfilling foreign sales contracts under conditions of downward fluctuations in the value of the US dollar.

Translation: David Silberstein