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40% business decline in Minas due to undefined popular car program

The federal government announced its plan to lower the price of popular cars as a way to boost not only consumption, but also the automotive industry. However, at least for part of the production line, the lack of program details had the opposite effect and hindered sales in recent weeks. Since the federal government’s announcement in May, approximately 40% of new vehicle sales slated to begin in Minas Gerais have been postponed or canceled altogether.

This estimate comes from Carlos Barreto, executive manager of the Association of Vehicle Dealers and Distributors of Minas Gerais (SYNCODIV-MG). “We strongly support the government program, but the issue of its announcement and implementation was complex, and our clients are postponing and even canceling deals that were already being made because They are waiting for the government to announce”, he describes.

The first statement of Vice President Geraldo Alcmin (PSB) was released on May 25. There are more questions than answers in the market, According to the federal government, the discount margin will range from 1.5% to 10.96% on cars priced up to R$120,000 and will cover 33 models. However, initially, the changes to taxes that would allow exemptions, for example, were not detailed. hey President Lula meets with Economy Minister Fernando HaddadThis Monday (5), when the measures are expected to be detailed.

Mobility industry consultant Ricardo Bacellar says announcing part of the project without defining all the mechanics of it feels like a government test. “I wonder what the purpose of this test balloon is. Because, in practice, he’s screwing up a market that wasn’t good and creating problems in a market that didn’t need more. People stopped shopping”, say experts.

Once the measures are fully explained, Syncodiv-MG expects sales to improve. “We are on hold and dependent on the implementation of government measures,” says the union’s executive manager. However, some market analysts believe the government needs to actually address other problems to help the market recover. need to deal with, Or the popular car program will have no practical effect,

Milad Kalume Neto, business director of JATO, explains, “Few cars are being sold in the country basically for three reasons: too high prices, loan restrictions by banks and too high interest rates. These last two were not covered by the government. And neither will there be.” Mobility. According to experts, if sales do not increase then it is not possible that companies will increase investment in the country.

At the national level, Sales at Brazilian dealerships fell 5.6% in MayAccording to a survey by the National Federation of Motor Vehicle Distribution (Fenabrev), a total of 176.5 thousand vehicles, including passenger cars, light utility vehicles, trucks and buses, were sold in May, compared to the same period in 2022.

“With this result, the month of May became the worst month for these sectors since 2016, excluding 2020, when we were experiencing the height of the pandemic and many dealers only kept their workshops open. In the first half of 2010, more than 300 thousand registered cars and light vehicles were registered in the month of May. We need to urgently implement government measures”, explained the unit’s president, José Mauricio Andretta Jr.

The president of the federation, which represents over 7,300 dealers through 54 brand associations, said he has received calls from his colleagues alleging sales are at a standstill due to consumers’ “waiting” for the government. “It is a very difficult situation, because, in addition to the targets established by the automakers, the dealerships are committed to more than 310 thousand direct employees”, admits Andretta Jr.

‘The public is thinking about a discount of R$20,000, R$30,000’

The National Association of Motor Vehicle Manufacturers (Enfavia) says it is possible for some models to cost less than R$60,000 – today, the cheapest new car in Brazil is the Renault Kwid, which costs around R$70,000. Even if the discount for the model were the highest announced by the government, around 11%, it would not reach R$8,000.

However, as car salesman Renata Mendes Machado reports, some drivers’ expectations are much higher than that. “We were on good sales momentum and, suddenly, after the announcement, it stopped. Generally the public was thinking that there would be a discount of R$20 thousand, R$30 thousand. That’s not going to happen,” he says.

Even with some customers scared of closing the deal, she says she managed to reach the May target – each salesperson needs to sell 15 vehicles per month. The dealership has its own discount policy to attract customers at this time.

In recent weeks, some companies have even begun to announce rebates similar to those offered by the federal government, confirms the Association of Vehicle Dealers and Distributors of Minas Gerais (SYNCODIV-MG). “It’s an interesting strategy to avoid stopping the market completely,” concluded Carlos Barreto, the unit’s executive manager.

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