Brazilian auto sales set for best half-year performance in 10 years, in line with fuel demand optimism

Brazil’s automotive industry is poised to witness its best half-year vehicle sales in 10 years, with an estimated total of 1,511,000 units licensed, preliminary data by the country’s National Association of Automotive Vehicle Manufacturers, or Anfavea, showed.

The higher sales could mean more fuel demand in the country in the long term, but it depends on the endurance of the strong results, analysts at S&P Global Commodity Insights reckoned.

Strikes, supply issues and floods in the country's southern region weighed on the auto industry in the first half of 2024, said Anfavea President Márcio Lima Leite in a Dec. 12 press conference. However, with a growing economy, Brazil’s automotive sector is expected to close the year with its highest growth since 2007, surpassing Anfavea's projections.

Anfavea expects the auto industry to end 2024 with 2,654,000 licensed vehicles, nearing pre-pandemic levels and surpassing 2023’s number of 2,309,000 licensed units.

The impact of vehicle licensing on fuel consumption isn’t immediate, but in line with future expectations of fuel demand growth, said Joao Lopes, analyst at Commodity Insights.

“[The growth in licensing] means consumers are more disposed or have started to have more resources to pour into the sector, which was impacted by the pandemic and unfavorable economic conditions in the past few years,” said Lopes.

Brazil’s overall diesel demand in 2025 is seen to be around 1.9% higher than in 2024, according to a report by Commodity Insights.

And 2024 gasoline C and hydrous ethanol demand is expected to be the highest ever registered in the country, Lopes said. The previous record was reached in 2023, he added.

In the heavy vehicle segment, full-year bus licensing increased by an estimated 8.5% compared to 2023, the highest total sales of buses in the country since 2014. Truck licensing increased by an estimated 15% in the last year, returning the sector to its standard levels after three unusual years, said Anfavea VP Eduardo Freitas during the conference.

Both bus and truck sales have bounced back from the effects of emission regulations established in 2022, which pressured 2023 results, Anfavea said in a release.

“In the long term and in a much more limited scale, electric bus purchase policies in some cities could be important for a domestic fuel demand reduction,” said Lopes.

Among light vehicles, licensing also grew by an estimated 15% compared to 2023, according to Anfavea.

Emerging vehicle sales (electric, hybrid and similar) are projected to grow by 85.9% in 2024 compared to 2023, according to Anfavea. Licensing of hybrid vehicle sales has gained momentum since September, with an expectation to close December at 7,000 units, followed by 6,900 units of hybrid plug-ins and 5,900 units of electric cars.

“It should take some time before the electric and hybrid fleets entering the market impact national fuel demand. Most vehicles in the current fleet are combustion-powered, and most of the emerging vehicles are hybrid, so they also consume fuel,” Lopes said.

Looking at 2025, Anfavea expects sales to increase by 5.6% compared to 2024.

Leite said the industry would continue to grow if Brazil’s economy kept growing. Credit incentives made by the government at the end of 2023 should also push 2025 sales higher. Growth could be impacted, however, if Brazilian central bank hikes interest rates, he said.

“We believe 2025 will be a very positive year,” Leite said.