China’s Jac Motors suspends project to build car factory in Brazil

26 September 2011

Sao Paulo, Brazil, 26 Sept – Chinese company Jac Motors has decided to suspend its project to build a factory in Brazil unless the Brazilian government reviews its recent increase to the Tax on Industrialised Products (IPI), the company said.

According to the Brazilian press, which cites a statement from the company, Brazilian businessman Sérgio Habib, who is responsible for Jac Motors in Brazil, decided to suspend the 900 million reals (US$480 million) project, “whilst it is not possible to reach an agreement with the government to review the measure aimed at reducing car imports.”

“It does not make sense to invest 900 million reals and to continue paying the equivalent IPI applied to imported cars because we do not have a 65 percent level of national incorporation,” the statement said adding, “if we make all this effort and pay the same IPI that we pay now, we prefer to continue importing.”

The statement said that after a meeting between the Brazilian Association of Automotive Vehicle Importers (Abeiva) and the minister for Development, Industry and Foreign Trade, Fernando Pimentel, Thursday, Habib said he was confident that it would be possible to reach an agreement with the government.

Jac Motor’s announcement follows China’s Chery, which is building a factory in the state of Sao Paulo, managing to delay until December the payment of the increased 30 percentage point charge on the IPI rate imposed last week by the Brazilian government. (macauhub)