Inovar Auto, Rota 2030 – A critical analysis on incentives for Automotive Industry in Brazil

The automotive industry importance for Brazilian economy is undeniable. Brazilian market is large, there is local competences, and despite cycles of crisis (such as the period since 2014 until now), still has potential to grow. Since the 1950’s this industry has been target of different forms of incentives: tax reduction, subsidies, loans from State Development Banks.

Aiming to increase the competitiveness, technology and security of vehicles produced and sold by the Brazilian Automotive Industry, in 2012 the Brazilian Federal Government established the “Inovar Auto” by executive law. It is an industrial policy that provides tax reduction benefits to assemblers that meet or exceed certain goals. The program is valid for the period 2013-2017 and will be reviewed at its end. 

The Inovar-Auto plan will be replaced by a new policy for the automotive industry, Rota 2030 (Route 2030). The rules of this new plan, objectives and criteria, are still under discussion. The expectation in the future is to maintain Brazil one of the largest vehicle markets on the planet - it was already the third for a short period and the fifth for a long time, but today it is in a modest ninth position.

As in all industrial policies, the results are not necessarily those initially expected. Thus, given the relevance and scope of the Inovar Auto Law, this paper aims to conduct a review of the preliminary results already obtained by different companies that joined the program. Our focus is to analyze incentives for Automotive Industry by the Brazilian automotive industry, with or without an external partnership, and how Inovar Auto Law has influenced this result and identify the next steps from the program Rota 2030.

 

Documentary research carried out through a protocol structured through interviews and academic articles with indicators on the objectives of Inovar Auto - emissions, investment in R & D and production, proposals of the Rota 2030 program. The possibility of comparative analysis with incentive policies to other countries generates a good analysis perspective.

 

 

We intend to identify:

1) To what extent new investments were made as a result of the Inovar Auto Law or were already planned by companies even without this kind of stimulus.

2) What the nature of those investments is: what the focus of the projects is, investments planned, if engineers and technicians were hired to do so.

3) To what extent Inovar Auto Law could impact the consolidation of R&D activities in Brazil or at least the establishment of a consistent strategy for firms.

4) Potential of the automotive industry from the initial informations of Rota 2030.

5) Inovar Auto Gaps: Trucks, Electric Vehicles