6 Jul 21

How to deal with lack of new car supply in Brazil

Owing to the lack of parts brought on by the impacts of the Coronavirus pandemic, acquiring a new car in Brazil could take up to six months but there are several alternatives you could consider in the country.  

For more information on the state of the fleet market in Brazil and other fleet and mobility topics in Latin America, visit the Latin America on-demand streams of the Global Fleet Conference 2021. 

One alternative could be acquiring a used vehicle that is still under warranty. Due to the high demand in the market, however, these vehicles are a bit expensive nowadays.   

Some models are even difficult to find for less than the national car pricing table FIPE.  For example, FIPE gives a 2019 standard compact hatch a price of some 46,000 reais (US$9,200). This type of car - which is very popular in Brazil - is difficult to find for that price nowadays.  

This brings us to other options, one being car sharing which involves accessing vehicles strategically located in parking structures in cities by way of a mobil app. After use, the app calculates the time used then charges accordingly. Another option is renting a vehicle which could be contracted short-term (daily or weekly) or long-term (3 to 4-year leasing) 

What I want to focus on today is subscription service which is a mid-term option that falls somewhere between short-term rental and long-term leasing. Approximately 8% of product offerings from car rental companies in Brazil are subscription. 

What this service involves is paying a monthly fee for a period of 12-48 months or to say one to four years. This is not only being offered by car rental and leasing companies but also by insurance agencies and directly from automakers.  
For the latter, the names of the subscription services being offered by OEMs include Volkswagen (Sign & Drive), Toyota (Kinto Flex), Caoa Cherry (Caoa Sempre), and Stellantis - Fiat and Jeep - with Flua. 

Depending on the length of the contract, total number of vehicles, kilometers allowed, and the models selected, the cost of this service could run from 1,000-5,000 reas per month or more for luxury sport.  
However, besides not having to deal with vehicle depreciation (at least 10% per year), a subscription contract frees you up from paying vehicle licensing, usage tax (IPVA), and insurance. Although there are many subscription models to select from, SUVs are quite popular today. A new SUV in Brazil could cost 80,000-300,000 reais. 

2021 Volvo XC40 Hybrid, approximately R$260,000 (copyright: Volvo) 

As a final tip, one thing to consider is to use subscriptions to try out new models such as electric vehicles (EV). Many questions arise when considering EVs, among them being those related to battery recharging and maintenance issues. Try a vehicle out for a few months and then determine whether are not making a more serious commitment is feasible.  
Keep in mind that purchasing the vehicle at the end of a subscription contract is also possible in Brazil. Check with your vehicle provider for details. 

Authored by: Daniel Bland