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LATIN AMERICA: "In need of a jumpstart... Brazil's automotive industry in a state of flux (Oct. 2014

LATIN AMERICA: "In need of a jumpstart... Brazil's automotive industry in a state of flux (Oct. 2014)" alert. 2-page Analyst Note by PwC.

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back to index backLATINtalk October,  2015


Truck: Brazil Market Sees Significant Declines Continue in Q3 2016 report

Commercial vehicle demand fell 46% in September, consistent with the declines seen over the past two quarters. Demand remains pressured as GDP growth falls (two consecutive quarters) and the government raises interest rates to fight higher inflation. Production declined 50% during the quarter, versus our estimate for a 40% decline. At this level of build, significant yoy declines (30-35%) would continue over the next few quarters.

- Q3 Takeaways: Demand environment is very soft with declines reaching 45-50%. Production cuts stabilized over the past few months, but comps remain difficult through the first quarter of 2016. Although most companies expected meaningful declines in 2015 (WABCO estimate down 30-40%), we look for companies' outlooks to move modestly lower given YTD weakness (down 44%).

- Commercial vehicle demand declined 46% in September, consistent with the decreases seen over the prior 5 months. Demand remains pressured as GDP growth falls (two consecutive quarters) and the government raises interest rates to fight higher inflation. Moreover, the government pulled back new truck subsidies at the beginning of 2015. On a more positive note, demand has stabilized near 7,000-8,000 units per month throughout 2015.

- Truck production fell 50% in Q3 versus our estimate for a 40% decline. Although production levels stabilized over the past 4 months, we expect the market to fall over the next few quarters as comps remain difficult through Q1 2016. Positively, given the substantial production cuts, inventory levels remain at a low level.

To download 5-page report, please click here.

Source: BAIRD
- GAI




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