An American journalist caused controversy this week by publishing an article mocking the prices of cars in Brazil. The bad news is that he is absolutely right and the Brazilian will have to swallow the dry jest. “One can imagine that pay US$ 80,000 for a Jeep Grand Cherokee means that it comes equipped with gold-plated wheels and wings. But in Brazil, this is the price of a basic”, writes the journalist Kenneth Rapoza, the online version of Forbes magazine. “With the US$ 179,000 that pays for a single Grand Cherokee, a Brazilian could buy three of them if they lived in Miami.”
The rule is the same for all imported models. This is because Brazil has one of the highest rates for importing cars in the world: 35%, according to the Brazilian Association of Importers of Motor Vehicles (Abeiva). Imagine a vehicle that leaves the factory for US$ 10,000. To come to Brazil, the automaker must pay the freight and insurance, averaged US$ 1000. Upon arrival in Brazil, the vehicle needs to be nationalized, that is, you pay 35% of the value that is already at US$ 11 000. Now it’s a ‘nacional’ car and, can start paying taxes as if it was born in Brazil. Read, IPI, ICMS, PIS / Cofins, etc.. and more brazilian taxes.
The text, full with a lot of irony, criticizes the fact that Brazilians confuse high price with quality and attribute status to anything that is expensive. “Sorry, Brazukas,” Rapoza writes. “There is no status to buy a Toyota Corolla, Honda Civic, Jeep Cherokee or Dodge Durango, don’t be fooled by the price charged.” says. Then he remembers that in the United States a public school teacher can buy a Grand Cherokee slightly used, while in Brazil a few people may have the privilege.
But not only luxury cars are affected by high prices in the Brazilian automotive market. Popular vehicles also have exorbitant prices, when compared with the international market. For the same amount that you buy a new Fiat Uno in Brazil (about U.S. $ 30,000), a Honda Civic could be in your garage, if you lived in Europe.
In Brazil, a car is not worth what it costs, but what the market pays. Not only the Honda Civic and Toyota Corolla, cited on the Forbes article that mocked the Brazilians, have values above reality. Many things do!