If the Brazilian government had a magic wand, it would be the tax known as the IPI, or the industrial production tax.
Every time Brazilian industrial production slips, the government extends an IPI tax break that was first introduced last year on car sales to try to stimulate production. Continue reading »
If Latin America was a gated community, Brazil and Argentina would be the neighbours that just cannot get along. Argentina would moan that Brazil keeps parking in its driveway and Brazil would complain that Argentina is building too big a fence around its backyard.
But in the real world of the region’s Mercosur trading bloc, things are a tad more complicated than that. Continue reading »
With friends like these, who needs enemies? Just when it seems like Brazil’s economy is on the mend, guess who wants to put a spanner in the works? Argentina.
A supposed partner under the Mercosul trade agreements, Argentina is proving to be right burden. Readers will recall that the hard landing of Argentina’s economy this year is estimated by Morgan Stanley to have shaved a fifth off Brazilian industrial production growth.
Now Argentina could worsen this outlook by calling on Brazil to delay the beginning of free trade in the car industry in 2013 and instead increase barriers. Continue reading »
Brazilian carmakers were happy to take the handouts when the government offered them. Now they are realizing they may have made a bargain with the devil.
After car sales plummetted earlier this year, the government granted tax breaks to the industry, which is dominated by the big four – Fiat, Volkswagen, General Motors and Ford. The measure slashed the retail price of cars and helped manufacturers clear a build-up of inventories that was burning a hole in their balance sheets. Continue reading »
Is this the same company? Is this the same country?
In 2011, Mercedes Benz was boasting about the record year it had in Brazil. The company sold 42,600 trucks in Latin America’s biggest economy and 14,900 buses, up from 40,850 and 14,320 a year earlier.
Now suddenly it is laying off more than 10 per cent of its workforce to cope with a slowdown in what only a few months ago was a market that was predicted to soon overtake Japan as the world’s fifth biggest for auto sales. Continue reading »
There’s no doubt that Brazil’s economy needed fixing. Despite its image as a booming Bric, Brazil has barely been growing at all for almost a year now.
But the government’s way of going about it late on Monday night is likely to raise a few eyebrows. Continue reading »