Average price of used vehicles has 1st fall after 21 straight months of high | Economy

The average price of used vehicles in Brazil suffered, in April, the first drop after 21 consecutive months of increase. Among new vehicles, the 20th consecutive high was recorded. This is what the data released this week by the Brazilian Institute of Geography and Statistics (IBGE) show.

According to the survey of the Broad Consumer Price Index (IPCA), considering the country’s official inflation, average used car prices fell 0.47% from March to April. The result interrupted a bullish streak that started in July 2020.

already the average new car prices rose 0.44% in the same comparison, maintaining the upward trend in prices started in September 2020.

  • IPCA: inflation stays at 1.06% in April and reaches 12.13% in 12 months

In the year, new cars were 4.86% more expensive, while used car prices rose 3.36%. In 12 months, the high was also higher among new: 17.58%, compared to 15.48% among used ones.

According to researcher André Almeida, an analyst of the survey carried out by the IBGE, this movement in prices is a reflection of the crisis faced by the automotive sector in the face of the coronavirus pandemic.

“With the pandemic, there was a breakdown of global production chains and, because of that, there was a lack of parts for the production of cars. Gradually, the industry seeks to adjust to the new market scenario.

The automotive industry has suffered for months from a shortage of electronic parts and components, which has forced companies such as Volkswagen to grant collective vacations at factories to adjust production, Reuters pointed out.

For researcher André Braz, economist at the Brazilian Institute of Economics at Fundação Getúlio Vargas, the fall in used car prices observed in April may have been one-off.

“I think that this price drop in April is a sporadic movement. It is not possible to conclude for just one month that this drop in prices is an effect of interest on demand, for example,” he said.

With the queue for delivery of new vehicles increasing in the face of the crisis faced by automakers, the demand for used vehicles increases more and more.. In view of this, Braz recalled, the natural movement of prices should be upwards, not downwards.

“Price is sensitive to demand. So, if demand is going up, prices should also go up,” he pointed out.

One of the factors that could explain this price drop recorded in April, according to Braz, is the so-called calendar effect – April had fewer working days than March.

“It may be that the concessionaires have made some promotions to not let consumption fall during the two holidays and, on average, prices have dropped a little. A single month of decline does not point to a downward trend”, emphasized the economist.

Braz pondered, however, that the sequence of high interest rates maintained by the Central Bank to try to curb inflation in the country tends, in the coming months, to pressure the drop in vehicle prices.

“If interest rates are higher, it is becoming more expensive to finance a car. This would cause demand to cool down and, with that, prices would fall”, pointed out the economist from Ibre/FGV.

The effect of interest on demand has not yet been observed in the IPCA. According to Braz, this is evidenced by the IPCA diffusion index, which went from 76.13% in March to 78.25% in April. This indicator reflects the spread of high prices among the 377 products and services surveyed by the IBGE.

“If more products are getting more expensive and this increase is higher than the previous month, then we can’t talk about interest pressure on demand yet”, he concluded.

Increase in new vehicle sales, decline in used vehicles

Despite the crisis faced in production, the sale of new vehicles registered, in April, the best result of the year, according to data released by the association of automakers, Anfavea.

According to the entity’s balance sheet, the daily average of sales was 7,750 units in the month, an increase of 0.3% over March, and the best result since December. Compared to April 2021, however, sales fell by 15.9%. And, in the comparison between four months, the retreat reached 21.4%.

The sale of used cars, on the other hand, fell in several comparison bases. According to data released by Fenabrave, which brings together the associations of dealerships, 675,300 units were sold in April, which represents a drop of 13.7% compared to March.

This drop, however, would be due to a calendar effect, as the daily average of sales remained stable at 35,500 vehicles and March had more business days than April.

Year-to-date, 2.68 million cars were traded, which indicates a 23% drop compared to the same months last year.

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