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“Cheaper car” program to get an additional R$ 300 million for corporate customers

The initial R$ 500 million will go only to individual consumers. Rentals and manufacturers protested

By Alzira Rodrigues | 6/28/23 | Translated by Jorge Meditsch

After Volkswagen’s announced it would halt two plants this week and another in July and the news about a sales fall in June despite the cheaper car package, the government decided to allocate an additional amount specifically for corporate consumers, according to a source linked to manufacturers. The amount should be about R$ 300 million, and the decision should be taken today or tomorrow.

The government’s incentive plan for the automotive sector positively affected retail sales, especially of models up to R$ 120 thousand, which benefitted from discounts from R$ 2 thousand to R$ 8 thousand.

Nonetheless, it caused a countereffect on direct (corporate) sales, especially for the rental companies, responsible for 30% of the overall market purchase. There was initially a retail sales deceleration as the customers waited for the package announcement and afterward, a total halt waiting for discounts for legal persons after June 21

As the government extended the individual customers’ exclusivity by 15 days, the manufacturers did not sell any cars to corporate customers. The alert of a possible market “turmoil” was made by Volkswagen’s South America president, Alexander Seitz, on June 21, when the manufacturer awarded its best regional suppliers.

He informed by then that the retail sales increase should be nullified by the fall of direct sales. He anticipated a wave of layoffs and plant halts in July and August, as is happening. General Motors has already announced a temporary layoff and the suspension of the second working shift at its plant in S dos Campos next month.

If the additional amount for corporate customers’ discounts is approved, the tendency is for the rental companies to intensify purchases from tomorrow and thus secure a more robust market performance in June.
It is possible that part of the amount initially reserved for trucks could be directed for this purpose.

From the R$ 1 billion approved for heavy vehicles – R$ 700 million just for trucks – only R$ 240 million has been liberated by the government so far. On the other side, R$ 420 million of the R$ 500 million approved for automobiles had already been used, according to an MDIC’s balance released last Friday, 6/23.

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Alzira Rodrigues

Jornalista formada pela Universidade Metodista de São Paulo, iniciou a cobertura do setor automotivo em 1981 na Sucursal do ABC de O Estado de S. Paulo. Manteve-se na área desde então, passando por outros jornais e também revistas e sites.

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