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.

  • HotRod Not me personally, but yes - lower prices will dramatically increase the EV's appeal.
  • Slavuta "the price isn’t terrible by current EV standards, starting at $47,200"Not terrible for a new Toyota model. But for a Vietnamese no-name, this is terrible.
  • Slavuta This is catch22 for me. I would take RAV4 for the powertrain alone. And I wouldn't take it for the same thing. Engines have history of issues and transmission shifts like glass. So, the advantage over hard-working 1.5 is lost.My answer is simple - CX5. This is Japan built, excellent car which has only one shortage - the trunk space.
  • Slavuta "Toyota engineers have told us that they intentionally build their powertrains with longevity in mind"Engine is exactly the area where Toyota 4cyl engines had big issues even recently. There was no longevity of any kind. They didn't break, they just consumed so much oil that it was like fueling gasoline and feeding oil every time
  • Wjtinfwb Very fortunate so far; the fleet ranges from 2002 to 2023, the most expensive car to maintain we have is our 2020 Acura MDX. One significant issue was taken care of under warranty, otherwise, 6 oil changes at the Acura dealer at $89.95 for full-synthetic and a new set of Michelin Defenders and 4-wheel alignment for 1300. No complaints. a '16 Subaru Crosstrek and '16 Focus ST have each required a new battery, the Ford's was covered under warranty, Subaru's was just under $200. 2 sets of tires on the Focus, 1 set on the Subie. That's it. The Focus has 80k on it and gets synthetic ever 5k at about $90, the Crosstrek is almost identical except I'll run it to 7500 since it's not turbocharged. My '02 V10 Excursion gets one oil change a year, I do it myself for about $30 bucks with Synthetic oil and Motorcraft filter from Wal-Mart for less than $40 bucks. Otherwise it asks for nothing and never has. My new Bronco is still under warranty and has no issues. The local Ford dealer sucks so I do it myself. 6 qts. of full syn, a Motorcraft cartridge filter from Amazon. Total cost about $55 bucks. Takes me 45 minutes. All in I spend about $400/yr. maintaining cars not including tires. The Excursion will likely need some front end work this year, I've set aside a thousand bucks for that. A lot less expensive than when our fleet was smaller but all German.
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