Brazil car dealers expect weak 2014 sales after 2013 decline

SAO PAULO Fri Jan 3, 2014 11:44am EST

SAO PAULO Jan 3 (Reuters) - Brazilian car dealerships on Friday forecast stable or slightly lower sales of new vehicles in 2014 after the pace of registrations fell in 2013 for the first time in 10 years.

Sales of new cars, trucks and buses are likely to hold steady in 2014 but could fall up to 3.5 percent if inflation accelerates or the exchange rate fluctuates widely, national dealership group Fenabrave said.

Rising borrowing costs, disappointing economic growth and fading consumer confidence have been dampening demand in Brazil, the world's fourth-largest auto market.

Sales declined 0.91 percent in 2013 from a year earlier to about 3.767 million vehicles, according to Fenabrave.

The association in August said it expected 2013 sales to expand 1.53 percent from 2012 after President Dilma Rousseff extended tax breaks on locally made cars through the end of the year.

But in December sales fell 1.51 percent from a year earlier to 353,860 cars, though sales were up from November by 16.81 percent.

The economist responsible for compiling Fenabrave's report, Tereza Fernandez of MB Associados, said car sales would likely expand an average 3 percent in Brazil in the next 10 years, well below the 10 percent per year seen in the previous decade.

Several of the world's biggest car makers have invested heavily in Brazilian factories, including Italy's Fiat SpA , Germany's Volkswagen AG, and U.S.-based General Motors Co and Ford Motor Co. The four companies account for more than 70 percent of vehicle sales in Brazil.

Fiat was Brazil's top seller of cars and light trucks in 2013, with 762,950 new registrations, or 21 percent of the market. Volkswagen was second with 666,700 cars sold, while GM sold 649,730 vehicles.

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