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MEXICO: "Automotive Tool, Die and Mould Specific Demand Study"

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back to index backLATINtalk October,  2015


Auto: Brazil Declines Worsen in September (2015) report

Auto demand fell 32% in September, the sixth consecutive double-digit decline. Sales declined 26% in Q3, modestly below our estimate for a 20% drop. Demand remains pressured by rising interest rates and GDP growth declines (two consecutive quarters). Declines accelerated in September after the government sounded the alarm” with plans to reverse the budget deficit to avoid a credit downgrade in 2016. With uncertain timing of an economic recovery, Brazil auto demand likely remains pressured into next year.

- Q3 Takeaways: Demand remains weak with little potential of near-term recovery. Demand/production fell roughly 25% in Q3, modestly below our estimate for a 20% decline. We expect companies to remain cautious on the market during earnings calls. Our estimate for a 15% decline in Q4 likely moves modestly lower given current production rates.

- Auto demand fell 32% in September, the sixth consecutive double-digit decline. Sales declined 26% in Q3, modestly below our estimate for a 20% drop. The economy has been weak since the beginning of the year due to rising interest and inflation rates. Consumer confidence took a step lower in late August when the government announced it plans to reverse the budget deficit in 2016 to avoid a credit downgrade. This measure likely pushes out the potential for an economic recovery.

- Q3 OEM Performance:

----- OEMs gaining share: Honda (+15%), Nissan (-7%), and Hyundai/Toyota (-8%).

----- OEMs losing share: GM (-39%), VW (-38%), and PSA (-28%).

- Auto production fell 42% in September. Build fell 25% in the quarter, 500 basis points below our estimate. Significant production declines in September likely reflect deteriorating economic conditions with lower probability for demand recovery. Positively, inventory levels declined in September given the production cuts and sequentially stable exports.

To download 5-page report, please click here.

Source: BAIRD
- GAI




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