With holidays and low inventories, car sales fall 38.9% in January

No entrepreneur in the automotive sector expects to break sales records in January, but the result achieved is now well below expectations.

Sales of light and heavy vehicles fell by 38.9% compared to December, according to data from Renavam (National Registry of Motor Vehicles).

In a normal scenario at the beginning of the year, this retraction should be in the range of 15% to 25%.

126,500 units were licensed last month, with an average of 6,025 cars/day. The result includes passenger cars, light commercial vehicles, trucks and buses.

Compared to January 2021, the fall recorded is now 26.1%. That month, the illusion that the Covid-19 pandemic was under control was beginning to dissipate.

The anticipation of purchases that traditionally takes place at the end of the year and the vacation period – for automakers and their customers – help to explain what happened. But there are other factors involved, the main one being the drop in inventories.

“The result is conjunctural and happens, mainly, due to the low inventories of the concessionaires, in December, and the persistent lack of products, still caused by the scarcity of inputs and components”, said the president of Fenabrave, José Maurício Andreta Jr., in a press release. He also cited difficulties generated by the high interest rates on financing.

In the first two months of 2020, therefore, before the pandemic, there were enough vehicles to meet 42 days of sales. Last December, that number was 16 days.

With the health crisis came the breakdown of supply chains. A shortage of parts, mainly semiconductors, has led factories to stop producing cars. That’s why stocks dropped quickly in Brazil, and waiting lines came.

In January, all segments monitored by Fenabrave showed a drop in sales compared to December and in the annual relation only trucks, buses and motorcycles showed advances of 17.3%, 3.3% and 4.5%, respectively.

Fenabrave also cited the heavy rains that have been occurring in several locations in the country as reasons for the market drop in January, as well as the increase in people’s contagion by the omicron variant of the coronavirus, which has caused a drop in store visits by customers.

The entity expects sales of cars and light commercial vehicles in 2022 to grow 4.4%, to 2.06 million units. The expectation for trucks is an expansion of 7.3%, to 136.6 thousand vehicles and for buses Fenabrave expects an increase of 8% in licensing, to 19,180 units.

The automakers installed in the country accelerated production in the last quarter of 2021, and much of what was manufactured came to serve consumers who had closed the purchase six months earlier. After this phase, the yards were again empty.

Supply problems persist, and the year begins with companies temporarily interrupting the sale of some products, both domestic and imported. Jeep, for example, has blocked new orders for Commander, whose waiting list is now seven months.

Factories are resuming production after the collective vacation period, however it is still too early to say whether February’s results will be better.

One of the problems is the accumulated increase in car prices, added to the rise in the basic interest rate, which makes credit more expensive.

According to KBB Brasil, a consultancy specializing in car pricing, the 10 best-selling models in the country accumulated an average high of 25.4% throughout 2021.

There is also the problem of the omicron variant, which can further reduce production capacity. For now, the brands say the situation is under control.

“The occurrence of cases of Covid-19 caused an increase in absenteeism in industrial plants, but at a level that does not affect the regularity of production. The situation is monitored in real time”, says the statement sent by the Stellantis group, which brings together Citroën, Fiat , Jeep and Peugeot.

“We made adjustments to the production process so that there was no impact on production. It is worth mentioning that, from the beginning, we reinforced our health and safety protocols —which we had already adopted before—, guiding all employees”, says Volkswagen, in note.

With Reuters