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Current Market Trends & Demand
Teresa Wagner
U. S. Consulate General, SaoPaulo, Brazil
A Presidential provisional measure of July 2018, implemented a new industrial policy for Brazil’s automotive industry, which addresses the following issues: (1) requirements for selling automobiles in the country; (2) creation of the Rota 2030 Program; (3) mechanisms for improving technology levels of the automotive parts sector in Brazil.
Automobile manufacturers and importers wishing to sell in Brazil are required to join “Brazil’s Vehicle Labeling program”. They need to maintain the same fuel consumption levels already achieved during the Inovar Auto program (the previous automotive program, which expired in December 2017), but need to improve energy efficiency level in future years. The automobile vehicles sold in Brazil are required to have several safety features, according to a schedule determined by Contran (National Transit Council).
On November 8, 2018, President Temer signed into law the Rota 2030 program, to stimulate Research & Development investments in Brazil and provide incentives for new technologies and manufacturing processes. The program which is designed for automobile, automotive parts and systems manufacturers, foresees reductions in income tax and social contribution over net profit collections, for companies that invest in R&D. Investments in advanced manufacturing (4.0), connectivity, new propulsion technologies, autonomous vehicles and its parts, nanotechnology, big data, data analytics and artificial intelligence will receive higher tax discounts.
Rota 2030 also determined that as of November 2018, automotive parts that are not produced in Brazil are exempted of import tariff. This measure benefits mostly the automobile makers with annual production capacity up to 35,000 units, and high imported automotive parts content. In order to receive the benefit, the importing companies are required to invest the equivalent of the 2% of the imported value in R&D, through existing funds or partnerships with science and technology organizations in Brazil, so as to capacitate them to produce such parts locally.
Market experts have outlined the following trends in the industry:
- Shared mobility (change in the purchase patterns of automobiles)
- Alternative fuels (increased use of natural gas, ethanol and bio-diesel)
- On line sales (digital sales channels, home delivery, etc.)
- New materials (lighter components and parts reduce fuel consumption)
- Internet of things (V2V and V2X, will allow for substantial increase in automobile safety)
- Autonomous driving automobiles.
MArket Trends