“Cars for the Masses: Brazil Considers Return of Affordable Models”

The Return of Affordable Cars in Brazil: Government Discusses Viability with Automakers

The return of affordable cars to Brazil is a topic that has been causing discussions among automakers and automotive associations for some time. Now, the government has entered the discussion, opening up the possibility of bringing back the most accessible models by simulating costs to verify their viability.

Affordable cars were first introduced in Brazil in the 1990s as a strategy of automakers to boost the country’s economy during a time of crisis. This measure has the same intention now, as the return of cheaper vehicles can help increase car sales.

It is therefore safe to say that this measure would be important, as the automotive industry is currently operating with 50% idle capacity. However, if we convert the price of an affordable car from 1990 to 2023, taking into account the inflation rate, the price would exceed BRL 80,000.

Given the current mandatory requirements and standards for vehicles, the price of cars has increased. But Margarete Gandini, Director of the Department of Development of the Medium-to-High Technological Complexity Industry at the Ministry of Development, Industry, Commerce and Services, stated that the government is studying some conditions to create a cheaper car.

According to Gandini, there is an ongoing debate with vehicle dealerships, based on a proposal from the National Federation of Automotive Vehicle Distributors (Fenabrave). The goal is to create a model that is viable for the affordable car category.

The car model should not cost more than BRL 50,000. However, in order to achieve this price, it will need to be compact, have low power, and run solely on ethanol. Currently, the cheapest vehicle sold in Brazil is the Renault Kwid, which costs around BRL 70,000.

Gandini also stressed the importance of CO2 emissions, stating that this point has been essential in the discussions. To bring back affordable vehicles, it will be necessary to improve financing conditions for Brazilians. The director did not comment on the possibility of using part of the FGTS (Brazilian Severance Pay Fund) to purchase a car.

The return of affordable cars to Brazil can have a positive impact on the country’s economy. This category can provide more options for people who need a car but cannot afford higher prices. It can also stimulate competition among automakers, leading to better quality cars and more affordable prices.

However, some concerns need to be addressed. For example, ethanol production in Brazil contributes to deforestation and the displacement of indigenous populations. Additionally, affordable cars may encourage people to drive more, leading to greater environmental impact.

Thus, the government and automakers need to ensure that the return of affordable cars aligns with the country’s environmental goals and contributes to sustainable development. By addressing these concerns, Brazil can benefit from the return of affordable cars without compromising its commitment to the environment.