Popular R$ 45,000 car is far from reality – 05/04/2023 – Maria Inês Dolci

Is the return of the popular car for R$ 45 thousand, as the federal government wants, feasible? Honestly, it’s far from reality.

It depends on many variables at the same time: expressive cut or exemption from state and federal taxes; long-term financing at very low interest rates, on a car project with all the obligatory safety items, but perhaps without comforts like air conditioning.

The benefits would be economic (increased sales), automotive safety (with more protection items for the driver, passengers and pedestrians) and environmental (cars that pollute less).

It is immediately clear that the obstacles to a good and cheap car are difficult to overcome. A fiscal framework is under discussion to replace the spending cap, with surplus public resources for social and infrastructure investments. In this context, waiving taxes that represent around 30% of the car price is as likely as universal peace.

The Selic, the economy’s basic interest rate, is at 13.75%, which has provoked an iron fist between the federal government and the independent Central Bank. Inflation indices (the alleged reason for the high interest rates) have fallen in recent weeks, but there are forecasts that they will rise in the second half.

The cost of money, therefore, is sky high. It would be necessary to subsidize loans for the purchase of vehicles, with terms starting at 60 months (five years), to fit into the pockets of middle-income families.

As for the design of a very simple car –without comforts like air conditioning, which is far from superfluous in a tropical country–, with a 1.0 engine, it would depend on the adhesion of automakers and auto parts companies.

One should also consider the guidelines of the Rota 2030 Project, created by the federal government in 2019, aimed at the automotive chain, with the objective of supporting technological development, competitiveness, innovation, vehicle safety, the environment, energy efficiency and car quality.

According to this project, new automotive safety items should be mandatory by 2030:

• Side impact test; loose seat belt alert; arrow side repeaters; daytime running lights and collision alert, for new vehicles and those already on the market from 2024 onwards.
• Stability control, in two phases: 50% of new vehicles this year, and 100% from 2024 onwards.
• Pedestrian impact protection from 2025 for vehicles not launched, and 2030 for new ones.
• Front impact protection, specific for SUVs, built into cars not launched by 2024, and 2026 on new ones.
• Reverse camera or sound sensor from 2025 for unreleased cars, and 2027 on new ones.
• Side pole impact protection in 2026 for vehicles not yet produced, and 2030 for new ones.

That is, even a popular car will have to have all these safety items, which are fundamental to increase traffic safety, but which have costs.

Today, the cheapest vehicle is sold for almost R$70,000. In the versions for PCD (disabled people), which are up to 30% cheaper due to the tax exemption, it is therefore close to the value intended by the government.

Apparently, the zero car dream, with the benefits already mentioned, is more like a dream than a reality, at least for now. Not to mention that the sale of thousands of vehicles would require a sharp improvement in road infrastructure – roads, tunnels, bridges, streets and avenues. And that, again, depends on money in the public coffers.

Perhaps a program to improve public transport across the country, with more subways, light rail vehicles, modern trains and buses (using non-polluting fuels) would be more viable, as well as socially and environmentally relevant.

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