Brazil expected to have difficulties exporting cars within three years

14 May 2012

The measures adopted by the Brazilian government to protect the country’s automotive industry will make it so that within three years it will be practically impossible to export cars produced there, the chairman of JAC Motors Brasil said Thursday in Rio de Janeiro.

Sérgio Habib noted that the measures adopted by the government to protect Brazil’s industry from imports, such as raising the Tax on Industrialised Products (IPI) for vehicles manufactured abroad and the requirement that products assembled in Brazil use at least 65 percent locally-produced parts, make Brazilian products more expensive.

“When car manufacturers are required to use national parts and components, the tendency is for the companies to reduce investment in innovation and the measures to reduce costs, as they are protected from foreign competition,” said the chairman of the Brazilian subsidiary of Chinese group JAC Motors.

The chairman of JAC Motors Brasil, which currently only sells imported vehicles, said that the company had lowered its sales forecast from 45,000 to 30,000 units for this year, after in 2011 it sold 25,000 vehicles.

Habib also said that sales would remain unchanged until the end of 2014, when the factory that the Chinese group plans to build in Bahia starts operating.

According to Habib, the revised sales forecast was not the result of a downturn in the market, but rather to the increase in Tax on Industrialised Products on imported products, which made the company less competitive and have less available funding for advertising. (macauhub)