Brazilian Auto Production Rises 20 Percent in 2004 to 2.2 Million Vehicles

SAO PAULO, Brazil January 7 , 2005; The AP reported that buoyed by rising exports and a rebounding domestic economy Brazilian auto makers, led by General Motors Corp., Fiat SpA and Volkswagen AG, increased production 20 percent in 2004 to 2.2 million vehicles, the country's auto industry association said Friday.

Domestic sales rose 10.5 percent to 1.6 million vehicles as the economy grew 5 percent and interest rate cuts during the first half of the year helped boost sales, according to the Brazilian Motor Vehicle Manufacturers Association.

An aggressive export drive boosted overseas sales nearly 52 percent, to $8.3 billion, the association said.

For this year, the association is forecasting production will be 2.3 million vehicles. The more modest pace will be driven by slower economic growth in Brazil, estimated at 3.5 percent for 2005, and higher interest rates. Interest rates rose in the last half of 2004.

Alberto de Oliveira, an economist for the Brazilian unit of Banif Investment Bank, said auto makers will be forced to keep prices competitive against a backdrop of rising steel prices. Brazil's biggest auto makers are General Motors, Fiat and Volkswagen.