Brazil

Last modification: 31 Jan 18

Chapter 1: Economic and business environment

Demographics

population 207 million (2017)

Capital

Brasilia

Major cities

Sao Paulo, Rio de Janeiro, Salvador, Fortaleza, Belo Horizonte, Manaus, Brasilia

Languages

Portuguese

GDP
  • GDP (nominal): $1.928 trillion, world ranking: 8th
  • GDP (per capita): $9,289, world ranking: 105th

* 2016 (source: Brazil's statistics bureau IBGE)

Unemployment rate

12%

* December 2017 (source: Brazil's statistics bureau IBGE)

 

Main industries

petroleum, steel, iron and chemical production, auto assembly, mining and processing of petroleum products, cement manufacture, agriculture, and tech industries

Currency

Brazilian real (BRL)

Interest rate

7.0% (December 2017)

Political key info
  • Governance: federal presidential constitutional republic
  • Eighth-largest economy in the world
  • Produces half the GDP of South America
  • 91st most attractive country in the world to invest
Inflation

2.95% (December 2017)

Chapter 2 : Automotive market, segments & sales

Total Car park
  • After a prolonged crisis, Latin American car markets have been recovering in the first half of 2017. Aggregated sales across the 28 countries in the entire region (from Mexico down to Argentina) were at 2.6 million for the first half of the year, up 7% from the same period in 2016.
  • As in the previous year, the best-selling model across Latin America was the Chevrolet Onix (100,294 sales, +26.8%), followed by the VW Gol (74,469, +14.7%) and the Ford Ka (70,005, +39.9%), the Renault Sandero (65,737, +60.5%) and the Toyota Hilux (60,550, +6.6%).

*Source : http://focus2move.com/latin-america-best-selling-cars/

95,099,183 registered vehicles of all types (May 2017)

New vehicle registrations (Cars, LCV, Trucks)
  • 2,050,327 new vehicles (cars, LCVs, trucks and buses) in 2016 (-20,1% year on year)
  • 2016 was the 4th consecutive year of falling sales, with volume at its lowest since 2006 (1,927,738 registrations)
  • Fenabrave, the National Federation of Automobile Distributors, has downgraded its growth expectations for 2017 to 2.034 million units for cars and LCVs, +2.4% compared to 2017, and to +3.15% jointly for the trucks (+2.8%) and buses (+4.4%) segment.

*Source: http://g1.globo.com/carros/noticia/2017/01/vendas-de-veiculos-novos-caem-20-em-2016-pelo-4-ano-seguido.html

Top 5 brands (total market)

2016

1. Chevrolet (17,41%)
2. Fiat (15,35%)
3. Volkswagen (11,5%)
4. Hyundai (10%)
5. Toyota (9.1%)

* Source: http://g1.globo.com/carros/noticia/2017/01/chevrolet-e-marca-que-mais-vendeu-carros-no-brasil-em-2016.html

Model preference top 5 (total market)

2017

1. Chevrolet Onix (188,660)
2. Ford Ka (120,307)
3. Hyundai HB20 (105,539)
4. Volkswagen Gol (73,919)
5. Chevrolet Prisma (68,991)

*Source: Focus2Move.com

Dealer network (including fleet dealer network)

While OEM-linked dealers are reliable for vehicle service and maintenance, the same cannot be said for third-party providers – at least not across the entire country.

Used car market/renewal cycle
  • 10.3 million used vehicles (cars, LCVs, trucks and buses) were sold in 2016, +0.21% compared to the previous year. Sales for 2015 were up 0.75% over 2014.

*Source: http://g1.globo.com/carros/noticia/2017/01/venda-de-veiculos-usados-fica-quase-estavel-em-2016-diz-fenabrave.html

  • While new-vehicle sales have declined due to the economic crisis, used-vehicle sales have remained very robust.
  • On average, small vehicles depreciate 10% after the first year, larger vehicles (including SUVs) about 26% after the first year.

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales
  • Total corporate fleet in Brazil is estimated at around 4 million vehicles
  • More than half of all corporate fleets are located in the Southeast, which contains the major population centres (incl. Rio de Janeiro and Sao Paulo).
  • Fleet sales forecast at around 550,000 to 650,000 units (2016)
Evolution fleet sales (last 5 years)

In terms of fleet acquisition trends, the compact SUV is one of the fastest growing vehicle segments in the Brazilian market with the Jeep Compass acheiving the No. 11 best-selling vehicle in 2017.

Chapter 4: Taxation & legislation

Brazil levies 35% duties on imported cars and parts to encourage vehicle buyers to purchase locally-manufactured vehicles and replacement parts.

4.1. Car Taxation


For vehicles, Brazilian law requires a licence and registration fee, a property tax and an insurance, all annual and all payable by the individual or legal entity that owns the vehicle.
- The licence and registration fee, called Certificado de Registro e Licenciamento do Veiculo, is a pre-determined but annually variable amount, set by the relevant authority.
- The property tax, called Imposto sobre a Propriedade de Veiculos Automotores (IPVA), amounts to 4% of the listed price of the vehicle (as listed in the state of Sao Paulo), and applies to all vehicles not included in a special category.
- The compulsory insurance, called Seguro DPVAT, is variable.

Special schemes provide for reduced taxation if vehicles are purchased by elderly and/or disabled people and certain special categories of legal entities.

4.2. Income tax – Taxable persons


Car ownership (either by the driver or the legal entity) must be reported in the individual annual tax return.

4.3. Company car


VAT deductibility in Brazil is very complex, and could vary according to the nature of the purchaser.

It should be noted that hire purchase counts as regular purchase in Brazil, and consequently a car hire-purchased should be considered as a regularly purchased vehicle for tax purposes.

In the case of leasing, taxes for PIS (Programa de Integração Social) and COFINS (Contribuição para o Financiamento da Seguraridade Social) would be levied on gross-revenue at a combined rate of 9.25%, or 3.65% for legal entities. There is a discussion ongoing on whether ISS (Instituto Sobre Serviços) is due on leasing agreements, especially in the case of financing leasing.

The above applies to the lessor, the lessee is not taxed.

4.4. Income taxes – drivers’ personal taxation


For personal tax returns (of employees), the Brazilian government distinguishes between company cars solely used for work purposes, and those also used for private purposes.

In the first case, no extra taxes are due.

In the second case, if the car is used habitually for private purposes, its use is considered a fringe benefit, and subject to taxation (as income tax for the employee, and as labour tax for both employee and employer).

If the value of the benefit in kind exceeds the equivalent cost of public transportation, the difference is considered a remuneration subject to labour taxation (for both employer and employee) and income taxation (for the employee).

There is no specific provision for charging VAT for the personal use of company cars.

4.5. Electric vehicles


Currently treated as regular vehicles, however some exemptions with regard to IPVA (i.e. vehicle property tax) may be available. See also 4.6.
 

4.6. Future developments


The Brazilian government is developing a system to reduce taxes on certain categories of cars with alternative powertrains, notably electric and hybrid vehicles.

4.7. Legal background (import taxes)

Chapter 5: Car policies

This section is empty…for now. Want to help us in filling it? Fill in your text in this section and become a wikifleet contributor!

Chapter 6: Funding methods

This section is empty…for now. Want to help us in filling it? Fill in your text in this section and become a wikifleet contributor!

Chapter 7: Fuel

Despite achieving self-sufficiency in petroleum in 2007, fuel cost in Brazil is rising, due to an increase in taxes on petrol and diesel.  

Companies prefer flex-fuel vehicles to mitigate the fluctuations in the price of the various fuels.

Fuel type segmentation (2013)

  • Flex: 93.6%
  • Gasoline: 5.9%
  • Hybrid: 0.014%
  • Diesel: 0.5%

Fuel price evolution
Despite boasting the world's highest rates of ethanol use, Brazil also has among the highest petrol prices in the Americas.

  • Q1 2014
    • Average price of a litre of petrol: €0.96
    • This is 3.89% of a day’s wages (€24.57)
    • At an average of 218.99 litres a year, petrol eats up 2.33% of an average annual salary.
  • Q1 2015
    • Average price of a litre of petrol: €0.95
    • This is 4.20% of a day’s wages (€22.61)
    • At an average of 218.99 litres a year, petrol eats up 2.52% of an average annual salary.
  • Q1 2016
    • Average price of a litre of petrol: €0.92
    • This is 4.55% of a day’s wages (€20.19)
    • At an average of 218.99 litres a year, petrol eats up 2.73% of an average annual salary.
  • Q1 2017
    • Average price of a litre of petrol: €1.08
    • This is 4.23% of a day’s wages (€25.55)
    • At an average of 218.99 litres a year, petrol eats up 2.54% of an average annual salary.

*Source:http://https://www.bloomberg.com/graphics/gas-prices/#20171:Brazil:EUR:l

Q1 2018: Average price of a liter of gasoline: 4.00 reais (US$1.27)

Chapter 8 : TCO components

This section is empty…for now. Want to help us in filling it? Fill in your text in this section and become a wikifleet contributor!

Chapter 9: Safety, insurance and telematics

  • The Global status report on road safety 2013estimates that more than 43 800 people are killed in road traffic crashes in Brazil every year. Road traffic crashes are a leading cause of death, injury and hospitalization, resulting in high economic and social costs. The majority (52%) of people killed in traffic are vulnerable road users – pedestrians, motorcyclists, and cyclists.
  • Road deaths per 100,000 inhabitants (2013): 23.4 (highest in South America)
  • Brazil road safety country profileincluding: 

*Source:http:// http://www.who.int/violence_injury_prevention/road_safety_status/2015/GSRRS2015_data/en/

Chapter 10: Environment

  • In 2014, Brazil was the 11th largest overall producer of CO2 emissions in the world, at 144.5 million metric tons of carbon.
  • Of all CO2 emissions, 44.7% were from transport – down from 51% in 1975.
  • In 2014, Brazil emitted 1.03 tons of CO2 per capita from transport, up on average 2.7% per year since 2000.

Chapter 11: Mobility

Ride-hailing services have been on the rise over the past few years.  In 2017, the company with the largest market share was US-based Uber, followed by Brazil's 99 (formerly 99 Taxi), and then Spain's Cabify. In January 2018, local firm 99 was acquired by China's leading ride-hailing company Didi Chuxing. 

Following some resistance by the companies and their drivers, government regulation of ride-hailing companies in Brazil's larges city, São Paulo, were tightened in January, 2018.

Chapter 12: Key trends to watch