Popular car: government ends program – 07/07/2023 – Market

The Vice President of the Republic and Minister of Development, Commerce, Industry and Services, Geraldo Alckmin (PSB), said this Friday (7) that the discount program for cars worth up to R$ 120,000 was ended. According to him, the measure was a success.

All R$ 800 million made available for the program that granted discounts to the purchase of “popular” cars were used up. The initiative, which had an initial budget of BRL 500 million, lasted a month in all.

“We are closing the part of the incentive of tax credits for light vehicles, which was a success. President Lula had a lot of social sensitivity in relation to employment and the importance of the industry at this moment that we are going through. We have an idleness of almost 50% . This could lead to job loss,” said Alckmin during a press conference at Anfavea (National Association of Automotive Vehicle Manufacturers).

One of the objectives of the program was to encourage the automotive sector, which suffers from the decrease in new car sales. According to the MDIC (Ministry of Development, Industry, Commerce and Services), 125 thousand vehicles were sold with discounts thanks to the program.

“There was a growth of 14.2% in registrations in June compared to May”, said the vice president. According to him, on June 30, there was the historical record of registrations, with 27 thousand cars.

“[A indústria] I had a huge stock, I couldn’t produce. If it sells, it resumes”, he evaluated. He hopes that with the drop in interest rates, car sales will grow again, helping the sector.

Asked about possible new stimulus programs for the sector, Alckmin stated that the path is “to improve the population’s income, employment, competitiveness, but there are exceptional moments in which we help”.

The program allowed a discount of between R$2,000 and R$8,000 for vehicles worth up to R$120,000. Of the total R$800 million, R$650 million went to discounts. The remaining R$150 million will be used to offset the loss of tax collection caused by the discount.

Earlier, Minister Fernando Haddad (Finance) ruled out the possibility of a new increase in resources for the program that grants discounts on the purchase of “popular” cars.

“This requires compensation. We are reaching a point in the year where there is no more fiscal space for this. I think that [o programa de carros] was important, mainly because there is still space for buses and trucks, less polluting, important to renew the fleet”, he said.

The automaker that received the most credits was FCA Fiat Chrysler, with BRL 230 million, followed by Volkswagen, with BRL 100 million, and Renault, with BRL 90 million. The list is completed by Hyundai, with BRL 80 million, GM and Peugeot Citroen, each with BRL 50 million, Nissan and Toyota, with BRL 20 million each, and Honda, with BRL 10 million.

Such as Sheet anticipated, the licensing of light and heavy vehicles accelerated in the last week of June, which ended with 189.5 thousand units licensed. The result represents an increase of 7.4% compared to May.

When considering only passenger cars, which were the main target of the measure, sales had a monthly increase of 11.4%. 142,000 units were issued in the last month.

Anfavea says it recorded, in the last week of June, 27,000 units licensed in a single day, which represented the third May daily registration in the history of the sector and the best in the last ten years.

With the end of the program, the entity’s president, Márcio de Lima Leite, says that the price of cars will increase. “What will happen has to be monitored. But, when we combine this with a reduction in interest rates, which is natural to occur, maybe one thing compensates for the other”, he says.

Despite the optimism with the government’s stimulus measure, Leite said that it is still too early to revise the annual projection of the sector’s numbers upwards. “We started the year with low numbers. We had some months that were not nice. It is essential to see how the months of July and August will behave. But there are still no grounds for us to review the numbers at the end of the year.”

When the program was launched, on June 5, the estimate was that it would last about four months. With the success of the plan, resources for cars reached R$ 400 million in just two weeks.

Last week, Lula signed a provisional measure that increased the resources earmarked for the program by another R$300 million.

Lower price, greater energy efficiency and greater industrial density (capacity to generate jobs and growth in the surrounding areas) were the three criteria taken into account to define the discount bands. The higher the score on these requirements, the greater the applicable discount.

The formulation of the program to encourage car purchases was announced for the first time on May 25th by Alckmin. Initially, the focus of the policy was on cars priced at up to R$120,000, but the government decided to also include trucks and buses – with discounts ranging from R$33,600 to R$99,400.

The program intended for buses and trucks continues. For trucks, automakers have already requested R$ 100 million of the R$ 700 million available. As for buses, R$ 140 million of the total R$ 300 million were used. “If it could, this program should be permanent”, pondered Alckmin. The duration of the initiative is four months.

To get the credit, it is necessary to write off an old truck or bus. According to Alckmin, there is a bottleneck in the program at the state Detrans, which take time to do so. “I spoke with Denatran [Departamento Nacional de Trânsito]they took responsibility for talking to all the Detrans”, he said.

Collaborated with Nathalia Garcia