Brazil finalizes new car fuel efficiency standards

Brazil finalized new rules for local automakers to avoid a steep tax increase by making vehicles more fuel efficient, using more domestically built parts and investing more in Brazilian research and engineering.
The new rules require local factories to improve fuel efficiency by an average 12% over the next five years to avoid the steep tax hike on foreign vehicles. Carmakers also must carry out most phases of assembly at local factories, using auto parts from Brazil and neighboring countries to avoid the greater tax burden.
The government measures are raising pressure on carmakers to boost employment and investment in Brazil.
“The goal is to create more jobs in the automotive industry,” Finance Minister Guido Mantega told reporters in a press conference announcing the new rules meant to bolster investments in the local industry of some US$20 billion over the next three years. The auto industry represents more than a fifth of the country’s manufacturing base.
“We are the world’s fourth largest auto market and the seventh biggest manufacturer … There is no reason Brazil can’t be the fourth largest automaker in the world,” said Trade Minister Fernando Pimentel.