Popular car will return to stores; see price and proposal – 03/31/2023 – Eduardo Sodré

The comeback of the popular car is the main topic of the automotive industry right now. The idea pleases both resellers –anxious for the resumption of movement in stores– and automakers. The matter is being analyzed by the MDIC (Ministry of Development, Industry, Commerce and Services).

The idea is to launch models powered only by ethanol, which will cost between R$50,000 and R$60,000. The engines should be the same 1.0 currently used, but with gains in performance and consumption.

The choice of fuel is related to decarbonization targets. If the cars are flex-fuel, it is more likely that consumers will prioritize gasoline in most parts of the country, due to the relationship between autonomy and the price charged at the pumps.

The proposal is to offer a product with greater environmental appeal and, in this way, sew an exclusive taxation category, adequate to the new tax framework.

One of the possibilities is to replace the nomenclature “popular car” with “green car”. It will be necessary to work with the target public to show the advantages of ethanol and exorcise old ghosts, such as the fear of shortages and the sudden rise in prices.

The Stellantis group, which brings together the Citroën, Fiat, Jeep, Peugeot and RAM brands, is the most excited about the theme. The company has been working for some time with the possibility of relaunching alcohol-only cars, in addition to offering hybrid options.

Antonio Filosa, president of the group in Latin America, has insisted on the theme. If the project is put into practice, it is likely that the company will run to repeat the success achieved in 1990 with the Uno Mille.

The car hit the stores two months after the Collor government reduced the IPI (Tax on Industrialized Products) for models with engines from 800 cm³ to 1,000 cm³. The rate dropped from 37% to 20%.

Fiat took advantage of what it had on the shelf and launched a model that did not have headrests among the standard items. The ventilation system had air vents only in the central part of the dashboard, and the right side mirror was not available.

It is important to remember that the Brazilian market was beginning to open up at that time. The cars available were outdated and profitable, far removed from the imported cars that were beginning to arrive. Producing them here was also unfeasible: the importation of the necessary robotic equipment had been prohibited for years, the industry was obsolete.

Popular cars dominated the market for almost 40 years, but the search for profitability amid the drop in sales undermined the proposal.

Automakers had to upgrade their vehicles to meet environmental and safety standards, and the tighter profit margins on “thousand” cars made these products unattractive for brands.

In a scenario of low interest rates and controlled defaults, the industry began to bet on higher value-added models. Then came the wave of compact utility vehicles, which today are the most successful models.

The crisis in the sector, however, increased over the past decade. Just when it looked like things were going to get better, the Covid-19 pandemic hit.

Idleness on assembly lines and production stoppages due to a drop in demand are signs that the current model is not sustainable.

Automakers are multinational, and today they invest in transforming combustion car factories into units dedicated to batteries and electric cars.

This movement consumes billions of dollars in Europe, China and, more slowly, in the United States. There is little left to invest in emerging markets.

By staying out of global plans, the risk of deindustrialization increases in Brazil. The ideal scenario would be for the country to turn the key and also receive contributions for the local assembly of electric cars, but it is still a distant step, which will only occur when these vehicles gain global scale and, with amortized costs, match the price of the options the combustion.

The arrival of electrified model factories –such as the installations of the Chinese GWM and BYD– are important and indicate the future, but the current moment also requires production volume to justify so many plants in operation throughout Brazil.

Therefore, the proposal for the return of popular cars is on the rise. When prices for the simplest 1.0-litre cars surpassed R$65,000, this concept lost its meaning.

The problem is not with the value itself, but with the rapid rise that has occurred throughout the pandemic. The Fiat Mobi Like, for example, cost BRL 43,700 in January 2020. This March, the same car is announced for BRL 69,000, an increase of 57.9%.

The increases were accompanied by repeated increases in interest rates, which added to general inflation and the loss of income for the population. Buying a zero-kilometer vehicle has once again become a distant dream.

Current plans, however, are not original. The recipe changes, but the basic ingredients are the same. Popular models are children of economic crises since the 1960s.

The first ones appeared at the end of 1964 to respond to an incentive program created by the military government. The cars were offered in batches released by Caixa Econômica Federal. To cost less, they were simpletons.

The Willys Teimoso, for example, had front seats that consisted of a lightly padded covering fixed directly on the metal structure, which was visible. Roughly speaking, it resembled an old stretcher.

The car was the stripped-down version of the Gordini, which lost 65 kilos in equipment and props. There were no arrows: the driver had to signal with his hand before making the turns.

The idea did not last two years. Those who acquired a model of this type sought to equip it to obtain some comfort and status. In addition to the Teimoso, cars such as the Volkswagen Pé-de-Boi, the DKW-Vemag Pracinha and the Professional Simca were mischaracterized.

Cars now, however, would not be as impoverished as in the past. The legislation regarding safety will be maintained, which guarantees, at least, the presence of front airbags and brakes with ABS (a system that prevents the wheels from locking in emergency stops).

Media centers and other connected items should not be part of the standard packages. It is not yet known whether the models will have air conditioning included in the basic list, but the steering systems with electric assistance tend to be maintained.