Brazilian Automakers Threatened by Increased Car Imports from the EU

RIO DE JANEIRO, BRAZIL – Despite celebrating the Mercosur-European Union agreement, the Brazilian association of automakers (Anfavea) believes that the end of the import tax on cars made in the European bloc could be a threat to the automotive industry, and called for a “race against time” for competitiveness.

The pact has no set date to become effective. To Anfavea, this should take two years. When it comes into force, European vehicles will see their tariffs gradually reduced, until they are phased out in 15 years.

The new Anfavea president, Luiz Carlos Moraes, said on Thursday, July 4th, that now the national industry has a time limit to seek greater competitiveness, referring to the time before the tax for the EU is zeroed.

Competitiveness is defined as the cost of producing a car in the country.

The executive was unable to say how much more expensive it is to manufacture a car in Brazil, but at the beginning of the year the automakers’ association published a study comparing the local industry with that of Mexico, one of the world’s largest exporters. According to the survey, producing a car in Mexico costs 18 percent less than in Brazil, the main differences being in materials and logistics.

According to the executive, Brazil needs to be more competitive not only on account of the agreement with the EU but also because other pacts will be established.

With regard to the prospects for further exports, the president of Anfavea understands that it is not a case of making domestic industry equal to that of the Europeans in all products, but rather “to focus on what we can do better.”

As an example, Moraes mentioned the potential of producing and selling abroad hybrid cars that support gasoline and ethanol.