Cars in stock last year: with tax breaks, Ford registered record sales in June

New automobile sales in Brazil soared 21.5 percent in June from May, turning in a record month as a combination of tax breaks, lower prices and improved confidence prompted consumers to flock to showrooms, the national dealers’ association, Fenabrave, said on Thursday.

Sales of new cars and trucks also surged 17.2 percent from June 2008, totaling 300,174 units. Sales have risen 3 percent in the first six months to an all-time-high of 1.45 million units for the period, the association said.

The numbers highlight the success of President Luiz Inacio Lula da Silva’s tax breaks on vehicles and home appliances to revive industrial production and pull the $2 trillion economy out of recession.

The renewal of the tax breaks, which the government said have proven effective in bolstering the economy, has allowed car dealers to trim prices, attracting new buyers.

Lula this week extended the tax breaks for vehicle sales through December. The government also implemented some breaks for a certain type of motorcycles, provided manufacturers do not resort to layoffs.

Household consumption, which has driven Brazil’s economic boom since 2004, firmed 0.7 percent in the first quarter. Brazil’s economy contracted 0.8 percent in the first quarter of 2009 from the previous quarter.

Fenabrave, betting on resilient consumer demand and easier credit conditions, kept unaltered its 3.13 percent forecast for growth in car and motorcycle sales this year.

Launched two weeks ago, a 104-unit residential project directed at middle-income families in Sao Paulo’s Vila Carrao area is the best example of that, Thomas Shapiro, president of GoldenTree InSite Partners, said at the Reuters Global Real Estate Summit. “We sold every unit in four hours,” Shapiro said, adding that the company has recently raised around $500 million to invest there.

When crises arrive, Brazilians traditionally prefer to invest in hard assets

Brazil has kept a low profile internationally in the past few months, he added. That was good for his company to identify good investment opportunities, as local listed real estate companies like Cyrella and Gafisa were suffering with the stock market debacle.

Shapiro said the fundamentals of the Brazilian economy looked better than expected for the year ahead and a stimulus package from the government has helped the real estate market heat up.

He also stated that the upper class in Brazil traditionally prefers to invest in hard assets when crises arrive, but discarded signs of a real estate bubble forming in the South American country, like the one that hit countries like the U.S. and Spain.

High demand in Sao Paulo

Due to a lack of available buildings, it is getting harder to find an apartment or a house to rent in Sao Paulo. In many areas of the city, the number of people searching for a home has more than doubled in some real estate agencies. For low-priced buildings, the waiting time can last four months.

The most sought properties of Sao Paulo have one and two bedrooms, with monthly rent between 1,000 and 1,600 reais – but the increasing demand makes rent prices constantly higher. According a research of the Habitation Syndicate of Sao Paulo (Secovi-SP), rent prices in the city rose around 11,1% between last June and this year’s May.

The jet maker also announced it has $20.9 billion in firm orders for its planes as of Dec. 31. In 2008, the company delivered 162 midsize jets used for regional routes, 36 executive jets and six jets for military and government customers.

Embraer was Brazil’s largest exporter from 1999 to 2001 and the second largest in 2002, 2003 and 2004. It currently employs more than 23,509 people, 87.7% based in Brazil.

Brazil’s retail sales rose more than economists forecast in September, a sign that consumer demand in Latin America’s biggest economy remained resilient as the global credit crisis began to deepen. Retail sales jumped 9.4 percent in September from a year ago, pushed by a 51 percent surge in computer sales, the national statistics agency said Tuesday.

The increase beat 20 of 28 estimates in a Bloomberg survey of economists, whose median forecast was 8.8 percent. Sales growth was less than the 9.9 percent increase in August. Brazilian President Luiz Inacio Lula da Silva, seeking to build on consumer demand growth, is using state banks to boost lending to carmakers, home builders and consumers and meet an economic growth target of 3.7 percent next year. Economists such as WestLB’s Roberto Padovani in Sao Paulo said the September sales report is a sign that consumer sentiment was holding steady.