UPDATE 1-Brazil auto production jumps in February, sales lag

Tue Mar 11, 2014 11:15am EDT

SAO PAULO, March 11 (Reuters) - Motor vehicle production in Brazil surged in February after auto workers returned from vacations, though production so far this year remains below levels seen in 2013 as growth in Latin America's largest economy lags.

Auto production rose 18.7 percent in February from January after having risen 2.9 percent in the previous month, according to data released on Tuesday by Brazil's automakers' association Anfavea.

Accumulated production in the first two months of the year was down 2.7 percent from the same period a year ago.

Automobile sales dropped 17 percent in February from January after having fallen 11.7 percent in the previous month, Anfavea said.

Part of the decline was likely due to a surge in sales at the end of last year, when consumers rushed to dealerships to take advantage of holiday sales and tax breaks.

President Dilma Rousseff's government cut taxes on automobiles in 2012 in an effort to boost manufacturing, spur consumption and protect jobs. Many local car-buyers were concerned that the taxes would be fully re-instated at the start of the year, leading to December's soaring sales numbers.

Brazil's finance ministry eased those fears only late in December, saying that the tax would be re-introduced gradually.

Many sector analysts expect sales to slow in coming years after the previous decade's boom. Brazilian economic growth is expected to cool to below 1.7 percent this year and not surpass 2 percent in 2015, according to a weekly central bank poll released Monday.

Brazil is a key market for the world's biggest automakers, including Italy's Fiat SpA, Germany's Volkswagen AG and U.S.-based General Motors Co and Ford Motor Co.

Fiat remained Brazil's top seller of cars and light trucks in February, with about 58,000 new registrations. GM and Volkswagen were tied for second place, selling some 42,600 vehicles each, while Ford followed with about 21,000 vehicles.

Altogether, automakers in Brazil produced about 281,500 new cars and trucks last month, while sales totaled about 259,300 vehicles, Anfavea said.

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