Brazil has the most expensive car in the world. Why?

The main arguments of the manufacturers to justify the high price of cars sold in Brazil are high taxes and low production scale. Another villain would be the high value of labor, but manufacturers do not reveal how much salaries - and benefits - represent the final price of the car. Much less production costs, a secret protected by law. The explanation of the manufacturers in Brazil to sell the most expensive car in the world is called Brazil cost, ie, the high tax burden plus the cost of capital, which burdens production. But the stories you see below will show that the villain is the price, yes, Profit Brazil. In no country in the world auto industry is an important factor in the GDP, the car cost so much to the consumer. The industry also blames what he calls the Third Sheet by increasing the production cost: spending on staff, who should be role of the state, but that companies end up having to take such as transportation, health care and other employee benefits. With a domestic market of one million units in 1978, argued that the factories would be impossible to produce a cheap car. It was necessary to increase the scale of production, thus, reduce the costs of suppliers and reach a final price at the level of other producing countries. Well: Brazil ended 2010 as the fifth largest producer of vehicles in the world and the fourth largest consumer market, with 3.5 million units sold in domestic market and a production of 3.638 million units. Three and a half million cars would not be sufficient volume to cheapen the product? As you will need to produce for the Brazilian consumer can buy a car at a price equivalent to that of other countries? According Cledorvino Belini, president of Anfavea, it is true that production increased, but now it is distributed in over 20 companies, so that the scale remains low. He chose a new level so that the volume can provide a reduction of the final price: five million cars. The tax burden fell The tax, the eternal villain, has declined in recent years. In 1997, the car paid 26.2 1.0% tax, the car with the engine up to 100hp collected 34.8% (gasoline) and 32.5% (alcohol). More powerful engines for the tax was 36.9% for gasoline and 34.8% alcohol. Today - with the criteria changed - the car collects 27.1 1.0%, the range of 1.0 to 2.0 30.4% paid for motor gasoline and 29.2% for alcohol engines. And in the upper range, above 2.0, the tax is 36.4% for gasoline car and 33.8% alcohol. I mean: the people's car had an increase of 0.9 percentage points in taxes, while in other tax categories decreased: the average car with petrol paid 4.4 percentage points lower. The alcohol tax release / flex fell 32.5% to 29.2%. In the luxury segment, the tax also fell: 0.5 points in the car and gasoline (from 36.9% to 36.4%) and 1 percentage point in the alcohol / flex. Car 1997 2010 Motor 1.0 26.2% 27.1% tax tax Up to 100hp (or 2.0) 34.8% 30.4% diesel fuel 32.5% 29.2% alcohol alcohol Above 2.0 Gasoline 36.4% 36.9% 34.8% alcohol-gasoline 33.8% alcohol While the total tax burden in the country, according to the Brazilian Institute of Tax Planning, increased from 30.03% in 2000 to 35.04% in 2010, the tax on the vehicle did not follow this increase.

Not to mention the actions of the government lowered the IPI (removed in the case of cars 1.0) during the economic crisis. The incentive policy lasted from December 2008 to April 2010, reducing the price of the car by more than 5% without this benefit was fully passed on to consumers. The manufacturers have a much higher profit margin in Brazil than in other countries. A survey by investment bank Morgan Stanley, England, showed that some carmakers installed in Brazil are responsible for much of the profit of their world headquarters and much of that profit comes from sales of cars with off-road appearance. Derived from ordinary passenger cars, these cars get a makeup and style adventurer. Some have high suspension, tires, mixed use, side straps and shock salient. Others have headlights miles, and some, the spare in the back, which gives a more sporty appearance. The profit margin is three times higher than in other countries The Bank Morgan concluded that these cars are highly profitable, have a much greater scope than the cars, which are derived. The technical institution calculated that the cost of production of these cars, as CrossFox, VW, and Adventure Palio, Fiat, is 5-7% above the cost of production of the models from which they derive: Fox and Palio Weekend. But are sold by 10% to 15% more. The Palio Adventure (which has 1.8 engine and locker system), costs $ 52 500 standard version and 40 900 (1.4 liter), a difference of 28.5%. In the case of Dobl (which has the same configuration), the Adventure version 9.3% higher costs. The analyst Adam Jonas, responsible for research, concluded that, overall, the profit margin of automakers in Brazil is up to three times higher than in other countries. The Honda City is a good example of what happens with the price of the car in Brazil. Made in Sumar, in So Paulo, in Mexico it is sold for $ 25,800 (LX version). This price includes the freight, of $ 3500, and profit from the resale of around 2000. There remain, however 20,300. Adding the costs of taxes and distribution to U.S. $ 20,300, we will have R $ 16,413.32 of tax burden (29.2%) and R $ 3,979.66 profit margin of dealers (10%). The sum gives R $ 40,692.00. Whereas in the U.S. $ 20,300 billed to Mexico the automaker already has its profit margin, Profit Brazil (additional) is R $ 15,518.00: R $ 56,210.00 (price sold in Brazil) less R $ 40,692.00. This is without considering that the car goes to Mexico has more equipment as standard, disc brakes on all four wheels with ABS and EBD, twin airbags, air conditioning, windows, locks and mirrors electric. The engine is the same: 1.5 of 116cv. Is it possible that the automaker has an additional profit of $ 15,500 on a car like this? What Honda talk about it? Nothing. Consulted, the company says only that the company does not discuss the matter. In Argentina, the basic version, the LX with manual transmission, dual airbags and alloy wheels of 15 inches, is priced starting at U.S. $ 20,100 (U.S. $ 35,600), according to Auto Blog. But the Hyundai ix35 is sold in Argentina under the name New Tucson 2011 for $ 56,000, 37% less than the Brazilian consumer pays for it: 88 000. Because the same car is cheaper in Argentina and Chile? The ACARA, the Automobile Dealers Associacion de la Republica Argentina, released in February, the

Congress of the U.S. distributors (NADA) in San Francisco, the values of the Corolla sold in the three countries. In Brazil the car costs U.S. $ 37,636.00, $ 21,658.00 in Argentina U and U U.S. $ 15,450.00. The consumer pays for the Kia Soul Paraguay U $ 18,000, half the price of the same car sold in Brazil. Both come from Korea. There is no tax to justify such a price difference. Another example of a potential riot, the Jetta is sold in Mexico for $ 32,500. In Brazil this car costs $ 65,700. Want more? The Goal I-Motion with airbags and ABS made in Brazil in Chile is sold for $ 29,000. Here is priced at $ 46,000. Volkswagen does not explain the price difference between the two countries. Requested by the report, sent the following statement: The main reasons for the difference in vehicle prices in Chile and Brazil can be attributed to tax and tariff differences between the two countries and also to exchange variation. Questioned, the company submitted additional explanation: The conditions relating to export contracts and strategic issues are addressed solely between the parties. No officer dispute the fact that the Brazilian car be expensive, even considering the FOB price: the cost of production, without the tax burden. But the subject is avoided so that even independent consultants do not venture to speak, as our interviewee, a former executive of a major automaker, now a partner of a consultancy, and who asked not to be identified. He explained that in the B segment of the market, where cars are input, Corsa, Palio, Fiesta, Gol, the profit margin is not as great because the factories gain in sales volume and brand loyalty. But in the upper income is much higher. What does the plant have a higher profit in Brazil than in Mexico, according to a consultant, is the fact that Mexico has a more competitive market. City is cheaper in Mexico than in Brazil because of the drawback A leader of Honda's ear off, blamed the drawback to explain the price difference from the City sold in Brazil and Mexico. The drawback is the return of tax imposed by Brazil on imports of parts and components imported for the production of the car. When the car is exported, the tax imposed on these components is returned, so that the base value is less than export industrial costs, ie: the City is exported to Mexico for less than R $ 20.3 thousand. But how much is the taxes of imported parts used in the City Sumar done? The source of the Honda does not respond as well as other industry leaders refuse to talk about it. Now as you can be the cost of imported equipment in the City? It is certainly less than the price difference between the car sold in Brazil and Mexico (U.S. $ 15,000). Incidentally, you should not consider that the low dollar against the real cheapened these components?

The account does not match and the automakers do not help to solve the equation. What happens with the Honda City is just one example of what is happening in the automotive industry. Despite the fierce competition, none of the automakers dare to lower prices of their products. Once established, no one wants to give up appetizing income Brazil. Heard by the self-evaluation, when he was visiting Manaus, the world president of Honda, Takanobu Ito, who responded by removing the taxes, the price of the car is more expensive in Brazil than in other countries because here you practice a price closer to reality . Outside is sacrificed sell more cars. He said the exchange factor weighs in the composition of the price of the car Brazil, but noted that what counts is the perceived value. What matters is the price the market pays. And because Brazilian consumers pay more than others? I also wanted to understand - Takanobu Ito said - the truth is that Brazil has a very high cost of living. Even the McDonald here is the world's most expensive. If the coin is the Big Mac - confirmed Sergio Habib, who was president of Citron and is now importing Chinese JAC - the cost of living in Brazil is the world's most expensive. The sandwich is priced at $ 3.60 there and $ 14.00 here. Sergio Habib investigated the Chinese market for a year and a half looking for a brand that would represent in Brazil. He found that the Chinese government does not grant the auto industry, that the wages of Chinese workers and engineers are not smaller than the Brazilians. There's so much pie in Brazil - concluded the business, not the car. A shed in China costs $ 400.00 per square meter in Brazil costs $ 1200. The freight from Shanghai and Beijing priced at $ 160.00 and Sao Paulo to Salvador 1800. For the president of PSA Peugeot Citron, Carlos Gomes, the prices of cars in Brazil are determined by Fiat and Volkswagen. The other automakers follow the trace level for leaders, owners of higher sales volumes and market reference, he said. Making a rough comparison, he cited the fashion market, perhaps the most price and said that most distorts the cost and price: Tell me, why Louis Vuitton would lower the price of their stock? He asked. He refers to the value perceived by the customer. That's what counts. The price has nothing to do with the product cost. Who sets the price is the market, said an executive of Mercedes-Benz, to explain why the Brazilian 265.00,00 pay $ 350 for a ML, in the United States costs the equivalent of $ 75 thousand. Why lower the price the consumer pays?, Explained the executive. In 2003, when it was released, the EcoEsport, Ford, had no competitor. It was a different car, unusual. Ford demanded exclusivity expensive: according to a source who had a great connection with the company at the time, and knew the product cost, the car had a net margin of $ 5000. The automaker put the price up there. If you paste, pasted

When a car has no direct competitor, the company plays the price up there, said an industry leader. It is usual, until the plant to launch the car at a price higher than desired, try to position the product in a higher level. If you paste, pasted. Otherwise, proceeds to give bonuses to the dealers to reposition the model at a price that the consumer is willing to pay. A recent example shows this behavior of the market. Kia has made a request to the matrix Korean Sportage two thousand per month, an amount that, according to its leaders, the market could absorb. And had already priced: 75 000. On the eve of the launch knew that the quota for Brazil was limited to one thousand units. The importer then repositioned his car on a level higher, to $ 86,000. And, as mentioned here: to sell it for $ 75,000 if you have queued to buy for $ 86,000? A version with automatic transmission, sold at R $ 93 thousand, is waiting and the price goes up to $ 100 000 on the parallel market. Cledorvino Belini, who is also chairman of Fiat and a member of the World Council of Fiat Group, responsible for the cost of inputs for the high price of the car made in Brazil. He said that steel costs 50% more expensive in Brazil in relation to other countries and that the energy in the country is one of the most expensive in the world. Anfavea doing a Competitiveness Study to show the government what he considers an unfair competitive industry installed in Brazil in relation to importers. The manufacturers consider that the cost of inputs more expensive and undermines the competitiveness of domestic industry. The steel purchased in Brazil is 40% more expensive than imported from China, which uses Brazilian iron ore for the production, said Belini. He also pointed out the cost of logistics as a problem of national industry and criticized the encumbrance of the capital. It is necessary that the government desonere capital in three sectors: supply chain, infrastructure and export taxes, he said. With the crisis, the sector has shown that (very) fat to burn. The price of some cars has fallen from $ 100,000 to $ 80,000. more expensive cars were even greater discounts. Are common discounts of $ 5 000, 10 000. How is this possible if there is a margin so elastic to work? GM sold a lot of Corsa Classic with a 35% discount for a rental Sao Paulo, according to an executive rental in question. The unit price was U.S. $ 19,000! The traditional automakers try to avoid the obvious, which is losing share to the new assembly, said Jose Carlos Gandini, president of Kia and Abeiva, the association of importers of vehicles. The dollar is the same for everybody. The automakers also buy components outside a lot. In addition, imported already pay a tax rate of 35%, so it is not unfair competition, on the contrary, the big automakers do not want is to give up the profit margin. Mini in size, big in the price Mini, Fiat 500, Smart, are different concepts of a normal car, although lower than the category of small cars, they provide more comfort, not to mention the care and taste with which they are constructed. They are fancy cars, equipped, for an audience that wants to show off, who wants to be trendy. That pays $ 60,000 for a car smaller than the Celtic which costs $ 30,000 and it is expensive. Where's the $ 30,000 that the consumer is paying more for the Smart and the Cinquecento and the $ 70,000 more for the Mini Cooper?

The Mercedes-Benz, Smart importing, did the math to our request of accessories minicar. He has four airbags, digital air-conditioning, ABS brakes with EBD, traction control and stability control. The company said the cost of this package would be around 20,000, considering the prices of equipment for the Mercedes line, since the Smart comes complete and does not have separate prices of the equipment. Even considering these prices is not yet justified the $ 62,000 for a car that takes only two people. Cinquencento Fiat sells for $ 62,000, exactly, and not coincidentally, the same price as the Smart. The car has seven airbags, leather seats, digital air-conditioning, sunroof, traction control, but is less than the Celtic. This package would cost, adding the values of equipment, as prices released by Fiat, U.S. $ 24 000. Therefore, in the fee of 62 000, has a much higher profit margin than that of a standard car. And those who buy the tiny Mini Cooper will pay a small fortune of $ 105,000. Of course size does not matter, especially when it comes to car. You could say that Ferrari is the size of a van. But the fact is that the manufacturers position their products in a certain level without taking into account the size, type of use or cost of the product, but just the price that the market pays, opting instead to sell more expensive to prioritize the volume , earning the profit margin. This policy may be valid for a Louis Vuitton bag, a product designed superfluous to a small elite of society, or even a Ferrari, not to leave the automobile world. But it should be for an ordinary car. In addition, there are examples of well-equipped car at prices much lower. The Chinese QQ, Chery, is the price of popular even filled with equipment, some of them lacking even in top-class cars, such as dual airbags and ABS, and CD player, parking sensor. The car costs U.S. $ 22,990.00, that because the importer has suffered pressure from dealers not to lower the price even more. The original idea - said the president of Chery in Brazil, Luiz Curi - QQ was selling for $ 19,900. According to Curi, the price of QQ can reach less than $ 20,000 in flex version 1.0, which arrives next year. Today the car has 1.1 liter engine and therefore collects twice the IPI's 1000cc, or 13%, that beyond the 35% import tax. Factories cut costs with increased production, squeeze suppliers, who claim the banks limited the government reduces taxes, as it did during the crisis, sales explode and Brazil becomes the fourth largest market in the world. And Profit Brazil remains unchanged, forcing the consumer to buy the most expensive car in the world