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SAO PAULO, Sept 4 (Reuters) - Automobile production in Brazil rose in August, though the slight gain looks unlikely to offset concerns over an industry crisis weighed by a sluggish local economy, weak consumer confidence and falling exports.
Car and truck production rose 5.3 percent and sales fell 7.6 percent from July, national automakers’ association Anfavea said on Thursday. Output dropped 22.4 percent from a year earlier, though, while sales slid 17.2 percent.
Brazil’s auto industry, which makes up a fifth of the country’s manufacturing output, has slashed production this year as sales lag. Anfavea on Thursday reiterated an earlier estimate that production would drop by 10 percent in 2014 from the previous year, while sales would fall 5.4 percent.
President Dilma Rousseff, who is seeking re-election next month, kept the auto industry humming in recent years with tax breaks and cheap credit, which has been pared back this year to ease the federal government’s strained budget.
In exchange for the stimulus, Rousseff asked that carmakers maintain employment levels during a slowdown two years ago.
But the auto industry cut its workforce by nearly 5 percent from January to July as domestic demand dried up.
A drop in exports have also weighed on the industry. In August, exports fell 50.6 percent from a year earlier and are down 38.1 percent in the year. Total exports for 2014 totaled 235,400 vehicles, Anfavea said.
The auto industry should see improvements in the second half of the year, Anfavea President Luiz Moan said at a press event on Thursday, citing a recent decline in interest rates for auto loans.
Brazil is the world’s fourth biggest auto market and a major base of operations for 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 August, with nearly 56,200 new registrations, according to Anfavea data. Volkswagen took second place, selling about 48,430 passenger vehicles compared to about 38,800 cars and light trucks sold by GM. Ford sold around 22,600 vehicles. (Reporting by Marcela Ayres; Writing by Asher Levine; Editing by Chizu Nomiyama and W Simon)