Ford sees late 2012 surge in Brazil market
SAO BERNARDO DO CAMPO
SAO BERNARDO DO CAMPO (Reuters) - Ford Motor Co (F.N) expects the Brazilian auto market to set a new sales record by the end of the year despite a sluggish start, as recent tax breaks and record-low interest rates jumpstart stagnant business at dealerships.
Rogerio Golfarb, Ford's head of corporate affairs in South America, said in an interview on Thursday afternoon that the market would see "a really strong pickup in the second half of the year due to government measures."
After sales more than doubled since 2005 amid a recent economic boom, Brazil's car industry has struggled this year along with Latin America's biggest economy. To spur consumer demand, Brazil's government in recent months has cut taxes on select products, including cars, and encouraged the central bank to lower interest rates to historic lows.
In the interview at Ford's factory outside Sao Paulo, Golfarb dismissed concerns that a 5 percent drop in sales through May would continue into the rest of the year. "There's going to be growth this year," he said.
Still, analysts are second-guessing the industry's estimate of 4 percent to 5 percent growth for 2012. Without a turnaround, they fear, the world's No. 5 auto market could shrink for the first time in nearly a decade.
Brazil's carmakers have reacted to the downturn by slashing production 10 percent in the first five months of the year, trying to reduce inventories near four-year highs.
After carmakers began short-term furloughs and voluntary buyouts for workers, the government stepped in last month with an aggressive industry tax cut.
Golfarb said the slowdown was a passing bump as Brazil's huge new middle class learns to handle unprecedented access to credit. A recent jump in delinquent auto loans chilled new lending in the sector.
Even if growth is slower than in recent years, Golfarb said, Brazil's auto market should continue growing faster than the country's economy. The risk going forward may be new competition from rivals opening factories in Brazil to try to tap one of the world's few healthy major markets.
"The race for market share in a world that's not growing could lead to overproduction," Golfarb said. "Our concern is to avoid that."
Ford's market share in Brazil touched a decade low last year, slipping along with the country's other biggest brands amid a flood of imports and new local factories. Ford sold about 9.5 percent of new vehicles in Brazil last year, down from a recent peak of nearly 12.5 percent in 2005.
Golfarb said an aging lineup explained part of the recent sales performance, and the company was looking to the arrival of new models to boost consumer interest, rather than offering discounts that would endanger profitability.
"There's no psychological factor saying we have to hold onto our market rank," he said.
Ford was the first carmaker in Brazil and has held onto fourth place in the market for years, but newer arrivals are gaining fast. France's Renault (RENA.PA) alone has increased its market share from 3.1 percent in 2007 to 6.7 percent in May.
In the first five months of the year, Renault's compact SUV, the Duster, has even outsold the Ford EcoSport, which created the segment in Brazil and reinvigorated the company's brand when it was launched in 2003.
Golfarb said Ford's redesigned EcoSport would hit the market later this year. The new model would be a significant upgrade to prior ones, he said.
(Editing by Lisa Von Ahn)
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