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Brazil finalizes new rules for auto industry

Steel News - Published on Mon, 08 Oct 2012

Reuters reported that Brazil has finalized new rules last week for local carmakers to avoid a steep tax increase by making vehicles more fuel efficient, using more domestically built parts and investing more in Brazilian research and engineering.

The government measures are raising pressure on carmakers to boost employment and investment in Brazil if they want to tap its vaunted demand part of a concerted defense of an industry representing more than a fifth of the country\'s manufacturing base.

Brazilian finance minister Mr Guido Mantega told reporters “The goal is to create more jobs in the automotive industry.”

He told “We are the world\'s fourth largest auto market and the seventh biggest manufacturer. There is no reason Brazil can\'t be the fourth largest automaker in the world.”

The new rules require local factories to improve fuel efficiency by an average 12 percent over the next five years to avoid the steep tax hike on foreign vehicles.

Carmakers also must carry out most phases of assembly at local factories, using auto parts from Brazil and neighboring countries to avoid the greater tax burden.

Investment in local research and development, engineering, supplier training and higher fuel efficiency targets will entitle companies to further tax reductions under the new law taking effect next year.

The car industry makes up more than 20% of Brazil\'s manufacturing base, which has struggled with high costs and a weak global economy.

Source - Reuters

(www.steelguru.com)


Posted By : admin on Mon, 08 Oct 2012
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