Lula’s warning: “We must stop importing so many vehicles”

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In January, when Ignacio “Lula” Da Silva began his third term as president of Brazil, replacing Jair Bolsonaro, President Alberto Fernández made no secret of his relief. “everything will be easier”, the Argentine president later told O Globo newspaper, and also said that Bolsonaro’s attitude in the previous three years had been “stimulating, offensive, aggressive”.

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The truth is that this antipathy between Fernández and Bolsonaro has not had its correlate in one of the sectors in which Argentina and Brazil are closest, which is the automotive industry.

During the more than three years that the Fernández government was in office, the local industry exported to increasing amount of vehicles in the neighboring country, together with the Argentine government increasingly limited imports of Brazilian vehicles, as well as from other countries outside the zone.

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During 2022, Argentina exported 202,000 cars and pick ups to Brazil, according to data from the Association of Automobile Manufacturers (ADEFA), with which one in ten vehicles of domestic sales in Brazil in 2022 (just under two million units) They were of Argentine origin.

Across the border, mighty ANFAVEA (the local equivalent of ADEFA, though four or five times as large) calculated this trade directly in foreign currency: while Argentina exported vehicles to Brazil for a total of $4,652 millionrepresented Brazilian vehicle exports to Argentina $1,868 millionless than half.

That surprising asymmetry in which the small partner exports many more vehicles to the big partner is a direct consequence of stocks and had the approval of the Bolsonaro government, whose former finance minister Paulo Guedes did not accept the arguments put forward by the Brazilian terminals against the Argentine restrictions. that policy of tolerance to Argentine stocks would come to an end with Lula’s return.

“We have to stop importing so many cars and produce them in Brazil. If we have 30 car plants in Brazil, we have to produce cars here,” Lula said in an interview with TV 247.

“How are we going through what we are going through in the automotive industry?” asked Lula, for whom the country’s business elites have stopped “thinking about Brazil”.

The Brazilian president said he intends to meet the representatives of the local car terminals grouped in ANFAVEA to understand “what is happening” and also criticized the interest rates, given that the domestic vehicle market moves with pawn loans.

In Argentina, Lula’s words were quickly decoded. “It’s clear that a more protectionist policy is coming from the Brazilian side, which (Paulo) Guedes didn’t even care about,” they said from one of the main local terminals.

A figure on the side serves to illustrate the issue of commercial asymmetry: on Wednesday, 22 March already past, the Secretariat of Commerce had not authorized that car manufacturer one of the Brazilian vehicle imports request for this month.

In Brazil, car factories have an installed capacity of producing 4.5 million units per year and are working at 50%. Last year they produced 2.37 million units (against 530,000 in Argentina) and for this year the terminals expect to produce 2.42 million.

In the neighboring country, there is no problem accessing the dollars needed to import auto parts, as is the case in Argentina, where local companies have to ask their foreign supplier for wait 180 days until the Central Bank sells them the currencies to pay for imports.

But even so, the Brazilian terminals face serious problems of supply of parts and semiconductors, which has become a staple piece in any vehicle (there are around 1,700 per unit). And the cost of credit has risen to a level that would be paltry in Argentina (the base interest rate is 13.75% per year), but in Brazil it is so high that domestic vehicle sales, driven by pawn loans, are slowing down.

In his television interview, Lula he did not mention ArgentinaA. It was not necessary: ​​it is the country to which Brazil today buy more vehicleS. According to ANFAVEA data, total vehicle imports in 2022 amounted to $6,145 million. Argentine vehicles accounted for 75% of total imports.

Source: Clarin

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