RIO DE JANEIRO, BRAZIL – Car prices in Brazil could fall by 1.4% to 4.1% after the government announced a tax cut for the sector, a measure designed to help the industry recover from the pandemic-induced recession, local industry association Anfavea said Tuesday.
The tax cut, announced in late February, took effect immediately. While most industrial products were reduced by 25%, the automotive sector received a tax cut of 18.5%.
The measure applies to all industrial products except tobacco products.
“The goal is to pass the tax cut on to consumers, but each automaker will make its own decision. We are experiencing an absurd increase in costs, but several automakers have signaled that they will lower prices,” said Anfavea president Luiz Carlos Moraes.
Anfavea’s chief made the statements after reporting that car sales in Brazil rose 2.2% in February from January to 129,275 units, but are still down 22.8% year over year.
Car production in Brazil rose 14.1% month-on-month to 165,935 units in February, although it fell 15.8% year-on-year.
Brazilian auto exports totaled 41,449 units last month, up 49.6% from January and 25.4% from a year earlier, Anfavea added.
Moraes said it was too early for Anfavea to revise its “conservative” estimates for 2022, despite possible disruptions in the supply chain due to the conflict between Russia and Ukraine.