How would Brazil auto industry fare in 2009?
Brazil auto industry has been hit hard by global financial recession and, as per most industry experts, its effects would be visible in 2009. Brazil's economy is in need for sustainable development and its banking system has experienced a crisis in sub prime market. This is crucial for auto industry in Brazil.
On an average, 72 percent of cars sold in Brazil automobile industry are bought by consumers on loans from these banks. Prior to global financial crisis affecting Brazil automobile industry, cars were financed fully. There were no requirements of entry payments and maximum duration of repaying automobile loans was 7 years.
This had increased real income of automobile industry of Brazil. It also made cars more affordable for all income classes. However, conditions have changed for worse in auto industry of Brazil.
From November, 2008 car dealers are asking for 30 percent down payment upon selling cars and time for repaying automobile loans has come down to 5 years. In 2009 installment rates in Brazil auto industry would go up to 1.60 percent from 1.35 percent. This rate is among highest in global auto industry. As of 2009 a maximum of 20 percent of applications for auto loans are being met in Brazil auto industry.
However, there are still certain favorable factors for consumers of Brazil auto industry. Maximum default period is still one and a half month. Rates, applicable for this period, are still round 3.7 percent.
Brazilian government is trying hard to improve conditions in its auto industry. It is working on increasing availability of credit by bringing down compulsory levels of local banks. It is also putting in $4 billion in Brazil auto industry. This money is being provided through Banco do Brasil.
Brazil auto industry is expected to do well as a number of important events are coming up in years to come. 2014 edition of football world cup would be staged in Brazil and this would require top class transportation infrastructure. Agribusinesses and mining industries are supposed to do well in 2010 and this would boost sales of trucks by 6 to 7 percent.