Auto sales in Brazil fell 1.2 percent in the first half of 2012, compared with the same period last year, but government stimulus measures fueled signs of a rebound in June, data showed Thursday.
Sales dropped to 1.72 million units from 1.74 million while production slumped 9.4 percent from 1.71 million last year to 1.55 million during the same period, said the National Association of Motor Vehicle Manufacturers (ANFAVEA).
However in June, sales rose 22.9 percent to 353,200 units, from 287,500 in May although production dropped 2.6 percent in June to 273,000 units from 280,000 in May, according to the auto trade organization.
"The tax cut had a very positive impact," said ANFAVEA president Cledorvino Belini. "This shows that there is flexibility in the market, prices remained more competitive and it's a good time for sales, which spurred demand."
He attributed the improved performance to measures taken by government to bolster the flagging auto sector, which, according to analysts, represents more than 25 percent of the country's industrial GDP.
President Dilma Rousseff's government recently announced tax and interest cuts to boost consumption and credit. It also unveiled plans to spend $4 billion on purchases of domestic goods and equipment to revive the flagging economy, "mainly in the second half of this year."
"It's premature to make projections for the end of the year, but we are optimistic," said Belini.
"We will have a good year, not excellent, but good," he added.
Last year, auto sales rose 3.4 percent to a record 3.63 million units.
It was the fifth consecutive sales record for cars and light vehicles for Latin America's largest auto market, surpassing the 3.51 million tally recorded in 2010, according to ANFAVEA.
Brazil's gross domestic product (GDP) grew only 0.2 percent in the first quarter of 2012, compared with the final quarter of last year.
And the South American giant's growth slumped to 2.7 percent in 2011 after expanding by 7.5 percent the previous year.