Brazil is on the path to becoming the world's fourth-largest auto market after banks cut interest rates and eased loan terms.
According to J.D. Power and Associates, vehicle sales in Brazil totaled 3.1 million in 2009, and the number is expected to rise to 3.4 million this year, a result of falling interest rates and longer loan terms. In 2008, auto loans averaged interest rates of 37 percent for 36 months, and current rates have fallen to 25 percent with loan terms of up to 80 months. Consequently, Brazilian sales of passenger cars and light commercial vehicles jumped 28 percent in March.
Record low interest rates in other sectors in addition to tax cuts helped lift Brazil out of its recession last year, and many experts believe that the economy will expand over 6 percent this year. Additionally, domestic and overseas automakers are increasing investments in Brazil, including Ford, PSA Peugeot Citroen and Hyundai. According to the National Vehicle Manufacturers Association (Anfavea), Brazil's vehicle production rose by 9.4 percent in March and exports jumped 67 percent.
Market insiders attribute the gains in Brazil's automotive industry to the country's status as a developing nation.