To increase the falling vehicle financing market in Brazil, local automakers are pushing for the reduction of the country’s Financial Operations Tax (IOF) which directly impacts the number of financing contracts for automobiles.
Local automobile manufacturers association Anfavea is currently discussing the matter with the Ministry of Economy, working to zero or at least reduce the IOF rate, Anfavea president Marcio de Lima Leite said on Friday (9 August) during the association’s July balance report on Brazil’s automotive industry.
The market share of financed vehicles (against outright purchases) has slid from 51% in February 2021 to 35% in June 2022. Only 61,000 vehicles were financed in June while 91,000 were acquired through outright purchase. In February 2021, the ratio was 78,000 financed and 76,000 outright purchased, according to data compiled by Anfavea and the local stock market B3.
Meanwhile, Brazil’s central bank has been struggling to get consumer price increases back under control for more than a year, incrementally raising the Selic lending rate from a record low of 2% in early 2021 to 13.75% in August 2022.
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