Brazil Investigating High Car Prices
Whenever our man in Brazil, Marcello DeVasconcellos reports on new model introductions in his home country, TTAC’s American audience is consistently blown away by the prices commanded by new cars there. Once, when asked why a new VW Amarok costs the equivalent of about $66,000 US dollars in Brazil, Marcello replied
Besides the very high taxes, there are the very, very healthy margins car makers practice down here.
Perhaps too healthy.
Dow Jones [via Fox Business] reports
Brazilian federal prosecutors said Tuesday they will ask the Finance Ministry to examine whether car makers in the country have been charging exorbitant prices.
There have been claims that high prices in Brazil are the result of “abusive profit” by automakers installed in the country, the federal prosecutor’s office said on its website. The prosecutors will also examine whether legislation such as the so-called Ferrari law–enacted in 1979 and named after auto dealer association president Renato Ferrari–which restricts competition among car dealerships, may also contribute to the high prices.
In retrospect, it’s almost amazing that it took this long for Brazil to look into this issue. After all, a MERCOSUR-built Amarok cost around $66,000 in Brazil, but only about $34,000 in nearby Chile (and many more examples exist). Clearly something fishy has been afoot, and needless to say, we’ll be asking Marcello to follow this investigation and report back on the results.
More by Edward Niedermeyer
Comments
Join the conversation
The point is.. The high taxes to produce aren't the only guilt, here the automakers make money like no other place in the world! But why? For a long time had only 4 automakers in Brazil we call they "the biggest four" GM,Ford,Volks and FIAT. Now imagine only 4 automakers in a country very big with a great future potential. There was no competition, there was was a gentleman's agreement!! So for a long time they put the price they want for any crap!! Only in the 90' Honda, Toyota and others came offering modern cars but costing a lot too! Because it was a new thing that we Brazilians were not used to drive. I'm finishing I swear... Now, nowadays what's happening is.. The imported Hyundai, Kia and the Chinese came with very low prices!! These two Coreans now are consolidated on our market so they started to sell for high prices to (are you understanding how things work here now?)But the imported chinese cars are the bigger problem for "The biggest 4" because the cars still chep and selling a lot!
Nice to see Brazil is finally investigating high car prices. I wish this would happen in Argentina. Although we have lower prices than Brazil, considering the low quality of cars and the lack of most safety features, prices should be much lower here as well. Nevertheless, I think the priority should be forcing car manufacturers to make safer cars. The existing regulations, which will be effective on January 1st, 2014, do not take into account how well the car's structure performs during a crash. You can't make a Kombi safer by just tacking on airbags to it.
Whilst stuck in Guarulhos Airport in Sao Paulo this February in a horrific rainstorm that closed the airport for 4 hours (yay), I had plenty of time to wander around. What did my bloodshot eyes see? A brand new Camaro SS. Fortunately, my other half was with me while I attempted my (awful) Portuguese to ask the long-legged lady about the vehicle. Surprisingly, she knew her stuff, but I nearly fainted when she told me the price: $R120,000. Yikes. Wow. I knew their import duties were stiff, but that was insane. That works out to be about $69,000, horrid even by Canadian standards! Still, I did see 2 of them in Camboriu a few days later. Some status symbol! I'll venture another reason prices are higher in Brazil. I stopped in at a Chevrolet dealer in SP on a trip there in 2005 and had a chat with the salesperson. He was very amiable and spoke better English than I did Portuguese. While snickering at the Chevrolet Omega (Catera here, LOL) they had in the show room, I asked him why there were no prices or stickers on the windshield. He went to a binder and started flipping through it. Holy, 1970s, I thought, what a bonanza for the sales staff! Make up prices on the fly! He tried very hard to spin it, but I laughed and told him that I was in the biz and he was preaching to the choir. Despite all that, traffic is awful everywhere, and even in the smaller cities like Jaoa Passoa, shiny new cars are everywhere. Someone is buying them!
Brazilians in general think that their incredibly high taxes and horrible regulations guarantee "order e progresso." What these guarantee is that unemployment and poverty will be forever high, whereas politicians will forever be rich.