New auto regime may shake up the sector in Brazil

Subject

The Brazilian auto sector.

Significance

Automotive production and sales have experienced a significant decline since 2014, although they have recently shown incipient signs of recovery, led by exports. Ongoing official discussions may change Brazil’s current automotive regime -- “Inovar-Auto” -- following defeat in a WTO dispute last year, replacing it with new guidelines under the plan named “Route 2030” until the end of the next decade.

Impacts

• Developments in trade agreements with Argentina, Mexico and other main partners will directly affect the auto industry.
• Improved income, credit and employment conditions will be necessary to recover pre-2014 domestic auto sales levels.
• Increasing exports is a key short-term goal to offset negative domestic sales results.