Brazil’s Car Rental Leaders Hit Hard as New Tax Rules Change the Game

Brazil’s biggest car rental companies, Localiza and Movida, saw their stock prices fall sharply on June 26, 2025.

This happened after the government announced new car tax rules designed to make cleaner cars cheaper and push automakers to produce more vehicles in Brazil.

The government’s plan introduces two big changes. First, the new “Green IPI” tax will lower taxes on cars that pollute less and raise taxes on those that pollute more.

Second, the “Sustainable Car” program will cut taxes on affordable cars made in Brazil, as long as they meet certain standards for fuel efficiency and environmental impact.

These changes sound good for the environment and for people who want to buy new, cheaper cars. But they create a problem for companies like Localiza and Movida, which own huge fleets of cars.

When new cars become cheaper, the value of used cars drops. This means Localiza and Movida lose money when they sell their older cars, which is a big part of their business.

Brazil’s Car Tax Changes Shake Rental Giants

On the day of the announcement, Localiza’s stock price dropped by almost 6 percent, and Movida’s fell by over 10 percent. These were the biggest losses on Brazil’s main stock markets that day.

This is not the first time tax changes have hurt these companies. In previous years, when the government cut car taxes, both Localiza and Movida had to lower the value of their fleets and report losses.

For example, after a tax cut in 2023, Localiza wrote down up to 1.5 percent of its fleet’s value. Used car prices for vehicles one to three years old began to fall faster than usual, forcing the companies to adjust their finances.

Despite these setbacks, both companies reported strong profits earlier in 2025. Localiza made R$842 ($153) million in profit in the first quarter, while Movida’s operating profit rose by more than 60 percent.

However, both companies also carry large debts, which makes sudden losses even more serious. These new policies show Brazil’s effort to modernize its car industry and reduce pollution.

But the immediate effect is tough for companies that rely on selling used cars. As the market adjusts, investors, carmakers, and customers will all have to deal with the changes.

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