Brazil July auto output falls 11.5% as sales drop

Automobile production in Brazil fell in July for the first time in three months as a strengthening currency weighed on exports and domestic consumers opted to delay purchases of cars.

Output fell 0.9 percent in July from June and plunged 11.5 percent from the same month a year earlier to 281,600 units, the national automakers' association Anfavea said on Monday.

Sales slid 4.9 percent from June and were down 0.9 percent from July 2008 to 285,400 units, Anfavea said.

Sales in June were unusually strong in part because consumers expected a government tax cut to expire at the end of the month, pushing many to buy earlier than they had planned.

In late June, the government extended the tax cut until the end of the year, meaning consumers in July were in less of a hurry to buy.

"The renewal was like a bucket of cold water for many who anticipated their purchases, so the effect in July was of a decline in activity," said Alexandre Andrade, a consumer goods analyst with Sao Paulo-based economic research company Tendencias Consultoria.

Exports fell 3.2 percent month-on-month, totaling 36,813 units worth $618.3 million, Anfavea said. They plunged by almost half from last year after global demand for vehicles cooled after the U.S. and most major developed economies fell into recession, Andrade said.

"That coupled with the gain in the real harmed exports and therefore auto output," Andrade said.

Brazil, Latin America's largest economy, is a major market for global automakers such as Italy's Fiat, Germany's Volkswagen AG and U.S.-based General Motors Company and Ford Motor Co.

Fiat led automobile sales in Brazil with 68,677 units, compared with 70,645 in June, while VW's sales dipped to 64,200 in July from 66,849 the previous month. GM ranked third in sales with 56,018 units, down from 58,634, while Ford sold 24,445 in July compared with 29,684 in June.

The industry's headcount fell 7.5 percent from July 2008 to 119,598 people last month.