Itaú BBA - Evening Edition – Vehicle sales increase in Brazil, but remain at low levels

Latam Talking Points

< Voltar

Evening Edition – Vehicle sales increase in Brazil, but remain at low levels

Junho 2, 2020

Vehicle sales remain at historically low levels, after dropping 40.7% mom/sa and 63.2% mom/sa in March and April, respectively

Talk of the Day
 

Brazil

According to Fenabrave, vehicle sales reached 62.2k in May, increasing 13.8% mom/sa (our seasonal adjustment). In year-over-year terms, sales receded 74.3%. The breakdown shows a 12.5% mom/sa advance in “passenger cars + light vehicles”, and a 29.4% mom/sa growth in “trucks + buses”. It’s worth mentioning that, despite this improvement at the margin, vehicle sales remain at historically low levels, after dropping 40.7% mom/sa and 63.2% mom/sa in March and April, respectively.

Itaú Daily Activity Index: Our Daily Activity Index has dropped 4.6 p.p. in the last available day (Saturday, May 30th) to 69.9, while the 7-day moving average increased slightly, by 0.5 p.p., to 71.8. The index is down 30% when comparing the latest data available with the first half of March. See our report here.

Tomorrow’s Agenda: The industrial production for April will be released at 9:00 AM (SP time), for which we forecast a 25.0% mom/sa decline, driven by the social distancing measures that were in place during the whole month. The main negative highlight will be auto production, which was close to zero units in the month, according to Anfavea. Other sectors are likely to show greater resilience, such as mining/extractive, food and paper production.

Chile

New cars sales fell by double digits in May as lockdown measures were amplified in the month. The National Automotive Association reported sales shy of 8.7 thousand units, recording a 72.2% yoy drop, the second consecutive of similar magnitude. Our own seasonal adjustment shows car sales retreated 5.1% from April, far less than in the previous month (-52.9% mom), but still leading to a 96.1% qoq/saar drop in the quarter ended in May (-9.1% in 1Q20). Going forward, the labor market loosening, depressed consumers and lingering domestic uncertainty would keep durable consumption depressed.

Colombia

A shrinking income deficit, as FDI profits falter amid low oil prices and weakened domestic demand, led to a current account deficit narrowing in 1Q20. A USD 2.7 billion current account deficit was recorded, USD 0.8 billion smaller than last year. Increased transfers, amid a notable currency depreciation, also aided the CAD narrowing, while the trade balance of goods and services remained wide as weak export dynamism offset falling import demand. Meanwhile, financing of the CAD remains healthy, with foreign direct investment fully funding the deficit in 1Q20. The rolling-4Q current account deficit edged down to 4.2% of GDP (4.3% last year). At the margin, our own seasonal adjustment shows CAD narrowing more swiftly to 3.5%, from 4.6% in 4Q19. The headwinds from the external scenario means Colombia’s external imbalances are likely to persist. However, weak internal demand and a weaker currency would lead to a gradual CAD narrowing to 3.3% of GDP this year (1.0 p.p. down from 2019). **Full story here.



< Voltar