Brazilian vehicle exports are expected to decline by double digits in 2023 compared to the year before, according to the automotive association Anfavea, as shipments to Argentina, a neighboring country, are being negatively impacted by a severe economic crisis.
In contrast to its earlier prediction of a 2.9% decline in exports during the same time, the association warned in a statement that it now expects shipments to decrease by 12.7% to 420,000 vehicles in 2023.
According to the report, exports have been the biggest red flag for the automobile industry in the first nine months of the year.
Anfavea claims that Argentina's economic crisis has led to the loss of its status as Mexico's top destination for Brazilian vehicle exports, despite the fact that Argentina's greatest trading partner is Brazil.
Argentina, which is scheduled to hold presidential elections on October 22, has been struggling with a crisis for years that resulted in annual inflation reaching over 120% in 2023. The government had to devalue the peso by 20% in August because its net reserves at the central bank were negative.
Brazilian vehicle exports have already decreased 11.2% in the first nine months of 2022 compared to the same period in 2021, according to Anfavea.
Besides the Argentine crisis, the association said, market share losses in neighboring nations like Colombia and Chile have also had an impact on Brazil's shipments.
Contrarily, the automotive industry in Brazil has done better than expected, prompting the organization to increase its prediction for local car sales this year to 2.23 million, up from the original estimate of 2.17 million.
That would be an increase of 6% from the previous year, it claimed.
A temporary government initiative to reduce the cost of cars through tax incentives, which was implemented in June, aided the Brazilian market. The program's tax credits quickly expired, but the market stayed hot even after that.
After the federal government's program ended, there was concern that the market might decline, according to Marcio de Lima Leite, the executive director of Anfavea. However, average sales per day have been steadily increasing for the last two months.
However, increased local manufacturing is not always a result of increased sales.
According to Leite, imported goods satisfy approximately two thirds of this rising domestic demand.
Anfavea said that, as a result, it now expects that in 2023, Brazil's automobile production will rise slightly by 0.1% from the year before rather than the 2.2% growth previously predicted. There were 2.37 million vehicles produced overall throughout that time.