September 4, 2015 / 3:49 PM / 4 years ago

UPDATE 1-Brazil auto output may keep falling through Oct -industry

(Adds outlook for coming months, sales by brand)

By Alberto Alerigi

SAO PAULO, Sept 4 (Reuters) - Automobile production in Brazil slipped in August and will likely fall again in September and October, the national automakers’ association said on Friday, as scarce credit and dismal consumer confidence add to an industry crisis.

Auto output fell 3.5 percent and sales dropped 8.9 percent in August from July, said industry group Anfavea. Compared with a year ago, auto output fell 18.2 percent and sales dropped 23.9 percent.

“It’s still a very difficult moment for the market,” said Anfavea President Luiz Moan, adding there was no short-term recovery in sight due to Brazil’s ongoing recession.

Inventories rose 4 percent to nearly 358,000 vehicles, or about 52 days of sales at the current pace, as supply continued to outpace demand despite idle assembly lines and furloughed workers.

The unused capacity led automakers to cut payrolls 10 percent in the past 12 months, adding to labor tensions and political pressure on President Dilma Rousseff, who set aside austerity to offer the auto industry cheaper credit last month.

Brazil is one of the world’s five biggest auto markets and a major base of operations for Fiat Chrysler Automobiles NV , Volkswagen AG, General Motors Co and Ford Motor Co.

According to Anfavea data, Fiat remained Brazil’s top seller of cars and light trucks in August, with about 36,000 new vehicles. VW extended its lead over GM, with about 28,400 sales, ahead of its U.S. rival’s roughly 26,900 new registrations.

Ford sold around 20,800 vehicles, down 21 percent from the month before. (Reporting by Alberto Alerigi Jr.; Writing and additional reporting by Brad Haynes; Editing by Marguerita Choy)

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