Brazil car makers hazy on 2002 sales after H1 drop

SAO PAULO, Brazil, July 4 Reuters is reporting that vehicle manufacturers operating in Brazil on Thursday hinted they may revise their 2002 sales forecast after a sharp slump in the first half as growth slowed in Latin America's biggest economy.

Brazilian sales of domestically made and imported cars, trucks and buses dropped 17.7 percent to 719,069 vehicles in the first half from the same period a year ago, the National Association of Vehicle Manufacturers (Anfavea) said.

Although the industry will have its work cut out to reach Anfavea's forecast of a 3 percent rise in annual sales to 1.65 million vehicles, Anfavea is only hinting at a revision of its outlook.

"There's an expectation of growth in the second half, but at new levels," Anfavea President Ricardo Carvalho told a news conference as reporters pressed him for a 2002 forecast. "They will not be extraordinary numbers for the year, but they will be positive."

The Volkswagen executive said he would not change the 2002 forecast due to economic uncertainties in Brazil, many of which are based on concerns about changes in economic policy after October's general elections, high interest rates, and a U.S. economic and market slump.

"The auto industry could not be immune to the atmosphere of uncertainty," Carvalho said.

Growth in Brazil's auto industry, which employs almost 94,000 people and is responsible for 1.7 percent of gross domestic product, has slumped since the second half of 2001 on the back of high interest rates and energy rationing.

Power rationing ended in March when rains boosted generation capacity at Brazil's predominantly hydroelectric plants, but a world economic slowdown and only a small decline in rates kept the pressure on the industry.

First half production also fell as manufacturers VW, Ford Motor Co., Fiat, and General Motors Corp.reduced working hours and laid off staff to cut costs. Output dropped 9.7 percent to 887,785 vehicles, while exports dipped 0.9 percent to 190,837.

In June, sales dropped 6.5 percent in relation to May and 19.8 percent below the same month in 2001. Production fell 8.6 percent below May and was 12.6 percent weaker year-on-year.