By Alzira Rodrigues | 6/6/23 | Translated by Jorge Meditsch
“Now it’s a run. We must hurry to sell and the consumer to buy”, said Márcio de Lima Leite, president of Anfavea, the Brazilian automotive manufacturers’ association, about the government measure issued at dawn this Tuesday, 6/6, establishing discounts from R$ 2 through R$ 8 thousand for automobiles costing up to R$ 120 thousand and also encouraging truck and buses purchases.
Different from the original project announced on May 25 to redeem the ‘popular car’ initially announced, the measure did not reduce taxes but defined a bigger reduction for the most affordable models, favoring the entry segment.
Among the most important points, initially, the discounts are offered only to individual consumers. Beginning on June 21, they will be available for rentals, fleet owners and other companies. The discounted cars cannot be sold for six months. Cars from Argentina and Mexico, countries that maintain bilateral trade agreements with Brazil, are included in the measure.
Although the discounts are supposed to be effective for four months, the incentives could end before it, as they are limited to a R$ 500 million credit for light vehicles.
“Considering an average R$ 4.5 thousand discount, this credit will be applied from 100 thousand to 110 thousand units, which should be sold in one month. Then, the program will end, or the government should decide to increase the initial amount”, explained Lima Leite.
In his opinion, the final result of the measure was good, the fruit of a very interesting process: “I said Anfavea wasn’t part of the discussions about a more affordable green entry car. But the program gained a larger scope, and we had more effective participation in the debate, which generated the expansion of the price range benefited and the inclusion of incentives for heavy vehicles”.
Questioned if the manufacturers have a warranty to receive the incentive credits defined, Lima Leite said there is nothing defined about it. But he recalled that the most relevant credits currently existent refer to the ICMS (merchandise and services circulation tax), which is a state’s tax, and exports.
He also said he does not believe in a benefit extension. “It’s a punctual measure, and we believe it will have an important effect on sales recovery by now. “We had asked for 12 months, so the manufacturers could present new products to be benefited, but what is designed now is to finish the program in no more than four months”.
According to Anfavea’s president, the important is that a legacy remains in the market to assure its continuous recovery after the program. About a possible discount maintenance after the measure’s period, Lima Leite said that each manufacturer would have its strategy: “The market dictates the rules”, said the executive, remembering that the entry segment is the less profitable. “It is impossible to foresee what will happen after the measure’s end”.
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