Brazil Imposes New Safety Standards As Consumers Fork Out More, While VW Gets A Pass

TTAC Staff
by TTAC Staff

The Brazilian auto industry has been on edge for a week and a half, as the Economic Ministry announced that the mandate for airbags and ABS on all Brazilian cars in 2014 was “under review”. Citing worries over inflation (as car prices make up an infinitesimal part of that complex calculation) and the fact that auto sales were down, the Economic Ministry said that the 2014 adoption of the aforementioned equipment might not be in Brazil’s best interest.

According to industry sources, the government expressed worries that the measure would increase vehicle prices anywhere between 1,000 and 1,500 reais per car. In turn, the OEMs put pressure on their suppliers to lower costs, so that the OEMs could maintain a healthy profit margin while keeping the price increase to around 500 reais, allowing them to adopt a posture that showed them as both safety oriented and caring about the consumer.

Although the safety mandate passed, an exemption was granted for the VW Kombi, which will remain in production.The Kombi is still made by hand in Brazil, and our sources tell us that they are among the highest paid auto workers in Brazil, and highly protected by the auto worker unions. In addition, the Komni’s precarious existence means VW is reluctant to train anyone to build the Kombi – they just keep the old timers around instead.

As late as a month ago, it appeared that the Kombi was finally set to die, and VW launched a final edition that cost 85,000 reais (roughly, $37,000), a sum VW happily pocketed. Now, with this announcement, VW can keep on making the Kombi, at estimated profit margins of around 80 percent.

The end result is more profit for the OEMs, and good PR for both the unions and the government. On the other hand, Brazilian consumers get the raw end of the deal.

TTAC Staff
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  • Synchromesh Synchromesh on Dec 19, 2013

    Is the market so awful that for $37K there is no better alternative than this relic of 50 year old technology?

    • Marcelo de Vasconcellos Marcelo de Vasconcellos on Dec 19, 2013

      There are. There's the Fiat Fiorino, a van based on the Uno, and the Doblo Cargo. The Fiorino is cheaper than the Kombi but smaller, and the Doblo is bigger and more expensive. Neither will seat more than 2, nor will they be as cheap to maintain. The Kombi can be maintained with spit and, a-hem, alternative market parts. So if you want to carry more than 2 people and cargo, Kombi it is. I believe the Fiorino outsells the Kombi, but I could be wrong. Oh, there were also some cheap Chinese vans. They started taking the market from the Fiorino and Kombi, so much so that VW started talking about the end of the Kombi. The Fiorino seemed to have held its own. But then, those Chinese vans started needing maintenance, frequently, business owners started to unload them fast. Business people gave them a chance, then killed them. Then the government raised taxes on imports rendering Chinese vans a mute point. Guess people who buy the Kombi are sort of like the people who insist on buying the Ford and GM vans in the US. No doubt they have a positive thing or two though its probably undeniable that in terms of car, the Euro vans are better. BTW, I believe the first Kombi rolled off a Brazilian assembly line in 57. So its closer to 60 yr tech now.

  • Hummer Hummer on Dec 19, 2013

    Seems pointless to push this regulation. Obviously if its still being made then people are still buying it, despite the lack of safety equipment. Obviously anyone who buys it is aware if its shortcoming, if they worried about safety then they have other choices. To demean this vehicle because of what it lacks, you may as well argue that the model T is dangerous because you can get a splinter from it.

    • See 6 previous
    • Marcelo de Vasconcellos Marcelo de Vasconcellos on Dec 19, 2013

      @Marcelo de Vasconcellos Agreed and agreed again, Hummer. The pain here is only starting. Hopefully you guys will improve faster and "carry" us along. Keeping my fingers crossed.

  • Kjhkjlhkjhkljh kljhjkhjklhkjh Elon hates bad press (hence TWITTER circus) So the press jumping up and down screaming ''musk fails cheap EV'' is likely ego-driving this response as per normal ..not to side with tesla or musk but canceling the 25k EV was a good move, selling a EV for barely above cost is a terrible idea in a market where it seems EV saturation is hitting peak
  • 1995 SC Wife has a new Ridgeline and it came with 2 years so I don't have to think about it for a while.My FIAT needed a battery (the 12V...not the drive battery), a replacement steering column cover and I had to buy a Tesla Charging adapter to use the destination charger at one of the places I frequent. Also had to replace the charge cable because I am an idiot and ran the stock one over and destroyed the connector. Around 600 bucks all in there but 250 is because of the cable.The Thunderbird has needed much the past year. ABS Pump - 300. Master Cylinder 100. Tool to bleed ABS 350 (Welcome to pre OBD2 electronics), Amp for Stereo -250, Motor mounts 150, Injectors 300, Airbag Module - 15 at the u pull it, Belts and hoses, 100 - Plugs and wires 100, Trans fluid, filter and replacement pan, 150, ignition lock cylinder and rekey - 125, Cassette Player mechanism - 15 bucks at the U Pull it, and a ton of time to do things like replace the grease in the power seat motots (it was hard and the seats wouldn't move when cold), Rear pinion seal - 15 buckjs, Fix a million broken tabs in the dash surround, recap the ride control module and all. My wife would say more, but my Math has me around 2 grand. Still needs an exhaust manifold gasket and the drivers side window acts up from time to time. I do it all but if I were paying someone that would be rough. It's 30 this year though so I roll with it. You'll have times like these running old junk.
  • 3-On-The-Tree Besides for the sake of emissions I don’t understand why the OEM’s went with small displacement twin turbo engines in heavy trucks. Like you guys stated above there really isn’t a MPG advantage. Plus that engine is under stress pulling that truck around then you hit it with turbos, more rpm’s , air, fuel, heat. My F-150 Ecoboost 3.5 went through one turbo replacement and the other was leaking. l’ll stick with my 2021 V8 Tundra.
  • Syke What I'll never understand about economics reporting: $1.1 billion net income is a mark of failure? Anyone with half a brain recognizes that Tesla is slowly settling in to becoming just another EV manufacturer, now that the legacy manufacturers have gained a sense of reality and quit tripping over their own feet in converting their product lines. Who is stupid enough to believe that Tesla is going to remain 90% of the EV market for the next ten years?Or is it just cheap headlines to highlight another Tesla "problem"?
  • Rna65689660 I had an AMG G-Wagon roar past me at night doing 90 - 100. What a glorious sound. This won’t get the same vibe.
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