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.