Brazil auto sales may pass Germany's as credit eases

Brazil may pass Germany this year to become the world's fourth-largest auto market after banks cut interest rates and eased loan terms, putting purchases in reach for more consumers.

Wider access to credit in South America's biggest economy expanded the pool of potential buyers by more than 50 percent, said Guido Vildozo, an IHS Global Insight Inc. analyst. IHS and researcher J.D. Power & Associates both forecast Brazil eclipsing Germany in 2010.

"Brazil is an emerging market, coming of age, and Germany is more of a mature market," said Jeff Schuster, J.D. Power's executive director of forecasting.

Brazil had been an independent country for only 64 years when German inventor Karl Benz got a patent for his first car in 1886. Germany, home to Volkswagen AG and Daimler AG, began the last decade as No. 3 in sales after the U.S. and Japan before being passed by China, which now holds the top spot.

Vehicle sales in Brazil totaled 3.1 million in 2009, compared with 4 million for Germany, according to J.D. Power. This year, Brazil will rise to 3.4 million and Germany will drop back to 3 million. Brazil's population is about 206 million, compared with Germany's 82 million.

Germany's projected sales decline follows the end of a 2,500 euro ($3,398) incentive for new-car buyers trading in older vehicles. The government approved the payments in January 2009 to help stem a market slump dating from August 2008.