Car discounts should not resolve automaker inventories

With the approach of the end of the resources initially foreseen, the federal government program to encourage the purchase of vehicles will have an expansion, which should also meet the demands of the rental companies in the sector. despite the measure was confirmed this Wednesday (28), the coordinator of automotive courses at the Getulio Vargas Foundation (FGV), Antonio Jorge Martins, says that the focus of the program is on the short term and may not resolve stocks car accumulation.

The specialist explains that one of the reasons why automaker and dealership yards have been crowded is the shrinking purchasing power of Brazilians over the years and the parallel advances in automotive technology, with the consequent increase in product prices.

While vehicles were gaining more and more technological artifacts, prices rose and the portion of the population able to buy them decreased, since wages, even with readjustments, did not keep up with the high figures left at dealerships. This trend of technological improvement followed by higher prices is not exclusive to the world of vehicles, says Martins.

“In terms of the Brazilian market, for example, televisions. As they increase their technological power, they become more and more expensive”, says the expert. “There is, today, a difference between what people can buy and what is being offered. So, why is it not called popular cars anymore? Because the popular cars that existed in the 90s were cars devoid of safety and connectivity . It was another type of product, which today no longer exists”, points out the expert.

“There was also a change in society’s own consumption profile. A practical example: if we offer that brick cell phone, we will hardly have buyers. The reality of the market today is that, really, everyone tends to aspire to what has more technology and, in the case of the vehicle, this is also present”, he adds.

Martins, who understands that structural issues require more complex solutions, also points out that it was not only in Brazil that there was a significant increase in prices, with the covid-19 pandemic. The additions, explains the FGV coordinator, were a way for the industry to deal with “new challenges”.

“In reality, there was a total disruption of the automotive sector, between the way it worked over the last 100 years and how it started to work from the 2000s onwards. What’s the big difference? I have a large number of companies that actually have a analogue culture and another that, in general, were born under the digital optics. Those that were born under the digital optics have many cultural difficulties in adapting to a new market reality, which is the fact that, today, the sector makes it much more dynamic than it was 100 years ago or what it has been. This dynamism is mainly due to the constant innovation of technology. Products that really require technology grow in price”, argues the educator.

“This is well located on top of some automakers, which were effectively focused on production volume and not on the sale of products with greater technological content and which effectively present greater profitability, but a smaller volume”, he clarifies, adding that the condition that the truck buyer leaves one for dismantling, when acquiring a new one, through a program, it can be an obstacle.

What was established is that, for car purchases, discounts will vary from R$ 2,000 to R$ 8,000. In the case of buses and trucks, the discount will be between R$36,000 and R$99,000. Everything will depend on the size of the vehicle and the degree of pollution.

rental companies

In an interview with Brazil Agency, the president of the Brazilian Association of Car Rental Companies (Abla), Marco Aurélio Nazaré, praised the government’s initiative, but made some reservations. He reaffirmed what the entity had already argued in a note on the 9th, regarding the order of the queue of the program, with prioritization of sales to individuals, at first. Access to discounts coming later was, therefore, one of the targets of criticism by the association, which also considered the ceiling of BRL 500 million low. Nazaré, however, approved the announcement of the expansion of the contribution, which he imagines will allow acquisitions to rental companies.

According to a survey released by Abla, at the end of March, car rental companies accounted for 30.1% of purchases in 2022. The proportion is equivalent to 590,520 units. Investment in the fleet was R$55.2 billion and the average amount spent on each vehicle was R$93.6 thousand.

“What we tried to say in the statement is that what would be sold to individuals is less than what the legal entity buys. Conclusion: as the program was announced, we paralyzed purchases, waiting for a purchase opportunity”, he says.

The president of Abla also says that the conjuncture scenario explains much of what happens in the sector today. “We have a very high indebtedness from class C downwards, a loss of purchasing power, an inability to absorb financing installments, as well as an extremely high interest rate. Because a car financed in 36 times doubles the price”, he says. .

So, it is impossible to absorb the installment in the budget, even if it is part of the value of the car, even if a down payment is given for the purchase of a car by an individual. So much so that it was the middle class that bought the cars that were allocated in this government program and not the class that, in fact, should buy and which is what the government would like them to buy”, he concludes.