Car sales surged in July thanks to tax incentives, boosting the automotive sector.

SAO PAULO (Reuters) -Vehicle registrations for cars and light commercial vehicles in Brazil increased in July compared to the same period last year and compared to June, driven by a reduction in the tax burden that came into effect at the beginning of last month, the dealers' association, Fenabrave, announced on Monday.

Sales of cars and light commercial vehicles in July totaled 229,95 units, a growth of 13,75% compared to the previous month and an increase of 1,18% year-on-year. In the accumulated period from January to the end of July, sales in the segment grew 4,4%, to 1,36 million units.

The Sustainable Car program launched by the federal government in July reduced the Tax on Industrialized Products (IPI), something that the president of Fenabrave stated contributed to the increase in sales.

"The new IPI policy for automobiles impacted the prices of entry-level vehicles, which stimulated demand in the month of its implementation and should be reflected in registrations for the rest of the year, allowing the sector to maintain the growth estimated by Fenabrave, of 5%," said Arcelio Junior in a press release.

New truck sales closed July with a 25,7% jump compared to June, something that Fenabrave attributed in part to the greater number of working days for registrations last month compared to the previous one.

Compared to July 2024, new truck sales fell by 5%.

"This year, in addition to this factor (working days), the reduction in the expected total volume of vehicle registrations for the year encouraged manufacturers and dealers to adopt a more aggressive sales approach, in order to accelerate inventory turnover," said the president of Fenabrave.

This year, the truck segment has seen a 3,85% drop in registrations, totaling 63,9 vehicles. Fenabrave expects a 7% decline, pressured by a high interest rate environment that hinders investment.

In total, new vehicle sales, including trucks and buses, reached 243,2 vehicles in July, a 14,25% increase compared to June and a 0,8% increase compared to the same month in 2024, according to data from the entity. The accumulated total shows a 4,1% increase in registrations compared to a year earlier, reaching 1,44 million units.

ELECTRIFIED

Registrations of hybrid and electric vehicles grew 17,9% in July compared to June and jumped 64,3% year-on-year, accumulating 139,2 registrations from January to last month, a growth of 47,2%, according to data from the entity.

BYD, the leader in the hybrid and fully electric vehicle segment year-to-date, sold 28.561 hybrid models and 28.821 electric models.

The second position in electrified vehicles is held by Fiat, from Stellantis, in the case of hybrids, with sales of 24.666 in the year to date. In pure electric vehicles, Volvo occupies the second position, with sales of 2.927 vehicles from January to July.

GWM came in third place in Fenabrave's year-to-date rankings for hybrid and electric vehicles, with sales of 17.631 and 1.560 vehicles, respectively.

AGRICULTURAL

Fenabrave also cited data on agricultural machinery, with tractors showing 9% growth in June compared to the previous year, totaling 19,7% expansion in the first half of the year, according to the entity, which did not cite individual figures. "The scenario remains the same, with some sectors of agribusiness investing and others in a more conservative position," said Arcelino Junior.

Meanwhile, combine harvesters were boosted by the seasonality of the corn harvest, and sales skyrocketed 44% compared to June 2024, advancing 7,1% in the first half of the year compared to the previous year.

(By Alberto Alerigi Jr. Edited by Pedro Fonseca)