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Automotive sales are likely to increase strongly all across the Latin American region in 2005. The increase in sales results from declining unemployment and the highest consumer confidence in a decade, according to the Canadian Auto Report by Scotia Economics (Toronto), released on December 30, 2004. Scotia Economics is the research unit of the Bank of Nova Scotia (Scotiabank).

Scotia said that South American sales were led by Brazil, Latin America's largest economy. It also said that Mexico car sales had increased 10 percent in 2004 to just over 1-million units, a record. For 2005, Mexican car sales will likely be 1.1-million units, another record. Scotia Economics includes Mexico in its tally of North American sales. Car sales in Brazil increased 14 percent during 2004, up to 1.34-million units. This sales figure was second only to the 1997 record sales of 1.36-million units. In 2005, the Scotia Economics expects that sales will increase to 1.4-million units, an overall record.

By contrast, world auto sales increased only 3 percent in 2004, and are expected to increase 2 percent in 2005 as the world economy slips into a widely projected slowdown. For all of South America, car sales will likely top 2-million units. Counting Mexican sales as part of the Latin America region would mean that Brazil and Mexico together would account for approximately 80 percent of the region's total car sales in 2005.

Booming car sales are not limited to Latin America's super economies. An early January 2004 story by Bloomberg News quoted Toyota's Venezuelan sales and marketing director as saying that the country's overall automotive market would increase 29 percent in 2005 to 170,000 units. This, however, is well below Venezuela's record annual sales of 216,977 units set in 1997.

Toyota, the third largest car manufacturer in Venezuela (after General Motors and Ford) is so optimistic about the coming year that it is expanding its manufacturing facility in Cumana. Last year the plant produced 110 units a day, and it 2005 production will be increased to 180 units a day.

Mexico, however, is the country with the greatest potential. Scotia Economics points out that Mexico has 100-million consumers. But vehicle ownership is low at only 0.17 cars and trucks per capita. Ownership in Canada is 0.57 cars and trucks per capita, and in the United States it is nearly 0.80.

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Publication:Market Latin America
Geographic Code:0LATI
Date:Feb 1, 2005

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