Resumption of vehicle exportations in Brazil
INOVAR AUTO is the Brazilian government's automotive regime which aims in creating conditions to increase competitiveness in the national automotive sector in producing more fuel-efficient and safe vehicles to invest in the supply chain, engineering, basic industrial technology, research, development and training providers. Created by Law Lei n° 12.715/2012 the program will be valid until December 2017. Such program allows qualified companies to benefit from presumed credit Tax on Industrialized Products (IPI) and its aim is to stimulate competition, efficiency and increased productivity of the automotive industry. To enable the program, companies must commit to specific targets.
As a result of the program there was a reduction of car imports to Brazil (with extra importation taxes). Before the program, 25% of vehicles were imported and today this figure has dropped to 14%.
The government’s program is almost finalising, which is good news for foreign companies that want to export vehicles to Brazil. This closure can become once again competitively attractive compared with national cars. At the end of the year, the scenario could be still better with the signature of MERCOSUL UE trade. Therefore, a focus on the sector is welcome!