Brazil – home to the world’s most expensive cars
September 9, two thousand eleven
Brazil has some of the most expensive cars in the world. This is a fact. The very same car sold in Mexico for Real 25,800.00 (equivalent to US$15,300.00) retails here for Real 56,210.00 (US$33,310.00). Astonished? Let’s look at some of the main reasons.
This largest of South American countries has an enormous tax revenue, a relatively low production rate and a high cost workforce. The manufactures here have to pay benefits such as transportation and medical assistance, benefits which in other countries are paid by the government.
Even tho’ total production has enlargened, that total comprises the output of more than twenty different companies, so the scale remains low.
The high taxes are down to what we in Brazil call “Custo Brasil”, which translates literally as “Brazilian cost” – the high tax revenue added to capital cost which burdens production.
The country’s vehicle output raises an interesting question: at the end of 2010, Brazil was the fifth-largest vehicle manufacturer in the world, and the fourth-largest consumer market, with an annual output of over three million units. Shouldn’t that be enough to shove prices down? Evidently not…
According to Cledorvino Bellini, President of Brazil’s National Association of Automobile Manufacturers (ANFAVEA), even tho’ total production has enhanced, that total comprises the output of more than twenty different companies, so the scale remains low. Bellini states that a production total of five million vehicles per year would be necessary to reduce consumer prices.
Another reason for the high prices paid in Brazil is the profit that manufacturers make on certain car models. According to the British investment bank, Morgan Stanley, some vehicle manufacturers located in Brazil are responsible for a critical global share of their headquarters’ profit, and much of these profits come from vehicles that seem to be exclusively off-road variants, which are a success here.
These vehicles are generally inbetween 5-7% more expensive than their mainstream equivalent. They are tooled with “off-road” features such as an elevated suspension, off-road tyres and car racks. As the profit margins here are almost three times higher than in any other country, this kind of vehicle reaches the consumer at a 10% to 15% higher price.
Albeit tax rates in the automotive industry are still very high, they are decreasing, and some government measures have helped, such as tax ease during the global economic crisis.
So it can be concluded that taxes are not the only cause of high car prices in Brazil – there are other aspects that lead to inflated prices and breathtaking profits. Albeit tax rates in the automotive industry are still very high, they are decreasing, and some government measures have helped, such as tax ease during the global economic crisis.
And the automotive industry is not the only industry to “suffer” from high taxation. Other Brazilian industries, such as electronics and clothing, have also enlargened rates, leading to high market prices. Some say that Brazilian people are used to that… Are we, indeed? Perhaps it’s time for a careful analysis of the situation.
The opinions voiced here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Brazil – home to the world – s most expensive cars – Automotive World
Brazil – home to the world’s most expensive cars
September 9, two thousand eleven
Brazil has some of the most expensive cars in the world. This is a fact. The very same car sold in Mexico for Real 25,800.00 (equivalent to US$15,300.00) retails here for Real 56,210.00 (US$33,310.00). Astonished? Let’s look at some of the main reasons.
This largest of South American countries has an enormous tax revenue, a relatively low production rate and a high cost workforce. The manufactures here have to pay benefits such as transportation and medical assistance, benefits which in other countries are paid by the government.
Even however total production has enlargened, that total comprises the output of more than twenty different companies, so the scale remains low.
The high taxes are down to what we in Brazil call “Custo Brasil”, which translates literally as “Brazilian cost” – the high tax revenue added to capital cost which burdens production.
The country’s vehicle output raises an interesting question: at the end of 2010, Brazil was the fifth-largest vehicle manufacturer in the world, and the fourth-largest consumer market, with an annual output of over three million units. Shouldn’t that be enough to shove prices down? Evidently not…
According to Cledorvino Bellini, President of Brazil’s National Association of Automobile Manufacturers (ANFAVEA), even however total production has enhanced, that total comprises the output of more than twenty different companies, so the scale remains low. Bellini states that a production total of five million vehicles per year would be necessary to reduce consumer prices.
Another reason for the high prices paid in Brazil is the profit that manufacturers make on certain car models. According to the British investment bank, Morgan Stanley, some vehicle manufacturers located in Brazil are responsible for a critical global share of their headquarters’ profit, and much of these profits come from vehicles that seem to be exclusively off-road variants, which are a success here.
These vehicles are generally inbetween 5-7% more expensive than their mainstream equivalent. They are tooled with “off-road” features such as an elevated suspension, off-road tyres and car racks. As the profit margins here are almost three times higher than in any other country, this kind of vehicle reaches the consumer at a 10% to 15% higher price.
Albeit tax rates in the automotive industry are still very high, they are decreasing, and some government measures have helped, such as tax ease during the global economic crisis.
So it can be concluded that taxes are not the only cause of high car prices in Brazil – there are other aspects that lead to inflated prices and terrific profits. Albeit tax rates in the automotive industry are still very high, they are decreasing, and some government measures have helped, such as tax ease during the global economic crisis.
And the automotive industry is not the only industry to “suffer” from high taxation. Other Brazilian industries, such as electronics and clothing, have also enhanced rates, leading to high market prices. Some say that Brazilian people are used to that… Are we, truly? Perhaps it’s time for a careful analysis of the situation.
The opinions voiced here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.