Sector fears new push for tax cuts or quotas
Executives at automakers operating in Brazil have welcomed the expiration of a program that allowed the duty-free import of partially assembled hybrid and electric vehicles under quota arrangements. The benefit, used by brands including China’s BYD, ended on January 31.
Industry leaders, however, fear the issue could return to the government’s agenda. Igor Calvet, president of Associação Nacional dos Fabricantes de Veículos Automotores (ANFAVEA), said recently that if a new request emerges to cut import tariffs or reinstate quotas, the association “will maintain its position in defense of domestic production.”
There are reports that Chinese automakers are mobilizing to seek renewed incentives. Behind the scenes, executives at longstanding manufacturers say companies would likely reconsider local investment and production plans if incentives for semi-knocked-down imports were reintroduced. Brazil’s current model prioritizes full vehicle manufacturing, with high levels of locally sourced auto parts.
Another positive development for the sector in early 2026 was the launch of the Move Brasil program, which makes R$10 billion in credit lines available through the Brazilian Development Bank (BNDES) for the purchase of new and used trucks produced in Brazil.
Of the total, R$1 billion is earmarked exclusively for independent truck drivers and cooperatives, a segment that accounts for a significant share of the country’s oldest trucks in circulation.
The program follows months of lobbying by vehicle manufacturers—particularly heavy-truck makers—who warned the government about successive sales declines driven by high interest rates.
The administration has presented the initiative as a way not only to support the industry but also to curb emissions, improve logistics efficiency, enhance highway safety, and accelerate the replacement of trucks more than 20 years old.
Participants have until May 25 to apply and can finance up to R$50 million, with a maximum term of five years and a six-month grace period. Annual interest rates range from 13% to 14% and are lower if a truck more than 20 years old that remains in operation is traded in for scrapping. Only trucks manufactured from 2012 onward, with certified local content and compliance with environmental standards, are eligible.
Brazil’s auto industry produced and sold fewer vehicles in January compared with both December and the same month a year earlier.
Output totaled 159,600 cars, light commercial vehicles, trucks, and buses last month, down 13.5% from December and 12% year over year. According to ANFAVEA, the annual comparison reflects a high base, as January last year marked the strongest result for the month in six years.
Domestic sales of 170,500 units fell 39% from December and slipped 0.4% from a year earlier. In practice, volumes were broadly stable, as there was one fewer business day this year.
The market for hybrid and electric vehicles, however, remains buoyant. Electrified models accounted for 16.8% of registrations in January, a record high. Within that segment, 35% were hybrids produced in Brazil—also the highest share on record.
Exports declined, with 25,900 vehicles shipped in the first month of the year, down 18.3% year over year. The main factor was a 5% drop in sales to Argentina, the leading destination for Brazilian-made vehicles.
January is an atypical month for the sector, as factories resume operations following collective vacations. It rarely signals broader trends. Most forecasts suggest production levels in 2026 are unlikely to change significantly from 2025.
This article was translated from Valor Econômico using an artificial intelligence tool under the supervision of the Valor International editorial team to ensure accuracy, clarity, and adherence to our editorial standards. Read our Editorial Principles.
