BRAZIL/SOUTH AMERICA REPORT
The Brazilian Federal Government this month has announced a package of incentives for the automotive sector during a press conference held in Brasilia (DF). The program intends to bail out the country’s automakers at a time of weak demand for new vehicles.
The final text includes passenger cars, Minivans and SUVs, Trucks and Buses through discounts granted to the consumer, and not by tax reduction to automakers, as was expected.
Total spending of Federal Government is US$ 300 Million (R$ 1.5 Billion). Funds are expected to come from the return of taxes on diesel sales, which was planned to happen in January 2024, but it is anticipated to meet the program of the automotive sector.
For passenger Cars, Minivans and SUVs, discounts range from US$ 400.00 (R$ 2.000) to US$ 1,600.00 (R$ 8.000,00). For commercial vehicles it varies from US$ 6,000.00 (R$ 30.000,00) to US$ 20,000.00 (R$ 100.000,00).
Of the total resources available to fund the program, R$ 500 million will be allocated to businesses involving automobiles. R$ 700 million will be allocated to businesses involving trucks and the remaining R$ 300 million to buses and vans.
To achieve these benefits, car models need to meet the requirements such as energy efficiency, price and 60% nationalization rate of parts.
In the case of heavy, the requirements involve the recycling of models with more than 20 years of use. From the recycling of the used truck, a certificate is issued, and, from it, the consumer will be able to access the bonus.
The idea of removing older trucks from circulation and giving incentives for the purchase of new ones is an old banner of the automakers, which has gained body and proportion with the regulation of the Renovar program.
Source: Automotive Business Read The Article
PSR Analysis. This package of incentives is the continuation of the fleet renewal program started in 2022. Measures could positively impact the LV and MHV markets, but probably won’t affect MHV. The operations and bureaucracy involved in truck and bus recycling are causing us to wait and see the actual effects of the incentives, rather than changing any projections. The impact on LV was already expected and included in our forecasts. PSR
Fabio Ferraresi is Director Business Development-South America for Power Systems Research
