Brazil auto sales soar in June as economy picks up

New automobile sales in Brazil soared 21.5 percent in June from May, turning in a record month as a combination of tax breaks, lower prices and improved confidence prompted consumers to flock to showrooms, the national dealers' association, Fenabrave, said on Thursday.

Sales of new cars and trucks also surged 17.2 percent from June 2008, totaling 300,174 units, Fenabrave said. Sales have risen 3 percent in the first six months to an all-time-high of 1.45 million units for the period, the association said.

The numbers underscore the success of President Luiz Inacio Lula da Silva's tax breaks on vehicles and home appliances to revive industrial production and pull the $2 trillion economy out of recession.

The renewal of the tax breaks, which the government said have proven effective in bolstering the economy, have allowed car dealers to trim prices, attracting new buyers.

Lula this week extended the tax breaks for vehicle sales through December. The government also implemented some breaks for a certain type of motorcycles, provided manufacturers do not resort to layoffs.

Household consumption, which has driven Brazil's economic boom since 2004, firmed 0.7 percent in the first quarter. Brazil's economy contracted 0.8 percent in the first quarter of 2009 from the previous quarter.

Fenabrave, betting on resilient consumer demand and easier credit conditions, kept unaltered its 3.13 percent forecast for growth in car and motorcycle sales this year.