Tax cut for cars will have an effect on automakers, says Anfavea

The president of the National Association of Motor Vehicle Manufacturers (Anfavea), Márcio Lima Leite, said this Thursday (25th), in São Paulo, that the tax cut in the sector, announced by the federal government, is producing immediate effects in the automotive production chain. He said that automakers are already changing plans to be able to produce more.

“We have heard from three factories that have suspended lockdowns (work stoppage due to lack of demand) that were foreseen. The effect (of the tax reduction) is immediate (and this explains) the urgency of these measures”, he said, in an interview, at the headquarters of the Federation of Industries of the State of São Paulo (Fiesp).

Leite said he was not authorized to name the companies that lifted the scheduled lockdowns, but said that the national auto industry has already recorded 14 factory shutdowns in 2023.

“We have 50% of idle capacity. It is really a moment of recovery for the industry. This phenomenon did not only happen in Brazil, it is a global phenomenon, but mainly in Brazil, interest rates ended up contributing a lot to the reduction of the market”, he explained .

More vehicles in production

For the president of Anfavea, the tax cut could increase the sector’s production by around 300,000 vehicles a year. He noted, however, that the measures have not yet been announced in their entirety.

“These measures could impact the market between 200 or 300 thousand units, but it depends, because we still don’t know all the rules. But it wouldn’t be too much to imagine something around 200 thousand to 300 thousand units depending on how this composition will be announced”, he stressed.

Next, Leite also highlighted that the tax cut will not cause a decrease in the technology used in cars, nor will there be a reduction in vehicle safety and environmental care.

“Mandatory safety items, which were a great achievement for the consumer and for society, are maintained. There is no flexibility with regard to vehicle safety. Likewise, there is no flexibility with regard to the environmental issue and there is a stimulus in character social due to the price of the vehicle”, he concluded.