Brazil's motor vehicle sales rose slightly in February thanks to a temporary government tax break that reduces car prices, the National Motor Vehicle Manufacturers Association, or Anfavea, said Monday.

Brazil's motor vehicle sales for February rose 1% to 199,366 units, but fell 0.7% when compared to February 2008 when abundant credit had consumers in hot pursuit of new vehicles.

Production for February rose 9.2% to 201,685 units compared with January, but output fell 20.6% from a year earlier.

Brazil's auto market, while a better performer than in the U.S. and Europe, is suffering from the same credit constraints and a rapidly ailing economy. The big three automakers in Brazil cut back on production in November and December, but revved back up again in late January and February after steep discounts on car prices had consumers returning to car lots. Stocks of unsold vehicles have dwindled down to manageable levels, according to company executives at General Motors (GM) and Fiat (FIATY).

Exports of Brazilian made vehicles rose 27.1% to $528.8 million, following sharp declines since November. Export revenue is down 49.2% in comparison to February 2008 figures, Anfavea said.

So far this year, Brazil produced 386,450 cars and light trucks, down 24.1% on the year. Sales over the two month period are down 4.6% to 396,820 units and exports are down 53.8% to $962.7 million.

Most of February car sales were do to sales increases registered by popular cars made by Volkswagen. The German automaker's sales far surpassed rival Fiat, up 12.2% to close the month at 42,531 units. The carmaker sold 80,452 cars in January and February combined, relatively flat in comparison with the same two-month period last year.

Fiat sales rose 1% in February to 37,196 units, and 74,029 vehicles in January and February, down 12.4%.

General Motors sold 28,406 units in February, down 13.5%. So far this year, the ailing U.S. automaker's sales are down 21.1% to 61,246 units in Brazil.

Ford (F) sold 17,201 vehicles in February, down 0.9%, but sold 48.8% more in the first two months of the year compared to the first two months in 2008. Ford has sold 34,564 units.

Low cost car sales, especially the VW Gol model, have been helped by steep cuts in sticker prices thanks to the temporary cut in the IPI industrial tax. That tax returns in April, though industry executives have expressed interest in keeping the tax break in place until the economy shows signs of rebounding.

-By Kenneth Rapoza, Dow Jones Newswires, 5511-8812-5961, kenneth.rapoza@dowjones.com

(Rogerio Jelmayer contributed to this story.)