Brazil commercial vehicle sales declined 32% yoy in February. Quarter-to-date, demand is down 35-40%, roughly in line with our estimates. With little near-term hope for an economic recovery, we expect demand to remain pressured throughout the year (Baird estimate down 20%). Production rates have declined 40-45% this quarter, roughly in line with our estimate. Positively, given the weakness in production rates over the past two years (20-50% declines), the Brazil market is becoming less meaningful for most OEMs/suppliers.
– Brazil commercial vehicle sales declined 32% yoy in February. Demand is down 35-40% quarter-to-date, roughly in line with our estimate. Truck demand remains soft given the weakening economic environment (down 5-6% yoy in back-half of 2015). Given little visibility towards an economic recovery, we have little confidence in a near-term recovery (estimate double-digit declines continue through Q3).
– Production is down 40-45% year-to-date, roughly in line with our estimate. Truck production has now seen meaningful (20-50%) declines over the past two years. We currently expect 10-20% declines over the next several quarters with declines beginning to moderate towards the end of the year as comps become easier.
– Positively, exports increased 15-20% yoy in February. Given the export strength and production declines, our proxy for inventory (production minus sales minus net exports) declined in the month.
– Quarter-to-date OEM sales performance.
—– OEMs gaining share. Volvo (-25% yoy), Daimler (-27%), Agrale (-34%).
—– OEMs losing share. Ford (-51%), Iveco (-48%), MAN (-43%).
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Source: BAIRD – GAI
