February 9, 2009 / 2:02 PM / 9 years ago

UPDATE 2-Brazil Jan auto output surges, sales gain

(Recasts, adds February data, economist comments)

By Elzio Barreto

SAO PAULO, Feb 9 (Reuters) - Automobile production in Brazil surged in January for the first time in six months, industry figures showed on Monday, as companies restarted assembly lines after putting the brakes on output to cope with weakening demand.

Output jumped 92.7 percent in January from the previous month, after sinking 47.1 percent in December and 34.4 percent in November, the national automakers' association Anfavea said on Monday. From a year ago, output was down 27.1 percent.

New automobile sales in January firmed 1.5 percent from the previous month, the second month of gains after a 9.4 percent increase in December because of tax breaks. Auto sales were up marginally in Latin America's largest economy.

Automakers said the output rebound has continued, with average production in the month through Feb. 6 rising to 10,800 vehicles a day from 8,900 last month.

Despite signs of a recovery in the automobile sector, Brazil's economy is still struggling with slumping consumer demand for appliances, electronics and other goods in the wake of the global credit crunch.

"It's too early to say the worst is behind," said Marianna Costa, chief economist at brokerage Link Investimentos in Sao Paulo. "There are still some effects of the credit crunch in the rest of the real economy and the job market. It will be a tough first quarter."

The tax breaks that have helped prop up car sales expire at the end of March. Early figures from February show average sales rising to 9,800 vehicles a day from 9,400 in January, Anfavea said.

Output in January reached 186,100 vehicles, while sales totaled 197,500, Anfavea said. Brazil's recent auto boom hit a peak last July when free-flowing credit pushed sales to 288,100 and output to 317,700.

Brazil is a major market for global automakers such as Italy's Fiat FIA.MI, Germany's Volkswagen AG (VOWG.DE), U.S.-based General Motors Corp (GM.N) and Ford Motor Co (F.N). Asian and French manufacturers are also boosting their presence in Brazil, Latin America's largest economy.

Fiat sold 43,312 cars and trucks in January, 1.75 percent more than the previous month. Volkswagen sales firmed 1.9 percent to 41,134 units, GM sales jumped 30 percent and Ford sales edged 0.2 percent lower, Anfavea said.

Exports plunged 50.5 percent in January from December to $428.3 million. (Additional reporting by Vanessa Stelzer, editing by Matthew Lewis)

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