Editorial Editorial 7 Anuário Yearbook ABLA 2013 The continued excise tax (IPE) cuts for automobiles and light commercial vehicles only prove what we already knew: that the growth of the automotive sector in the economy makes a difference. Reduced excise tax helps maintain the sales planned by the automakers, but the biggest challenge remains - how to forecast an approximate residual value for used cars when they are sold? As hard as it may seem, the answer depends on a long-term automotive policy that this industry has for so long been calling for, and appropriate finance conditions. Freezing excise tax is quite different from resolving the issue. The government cannot manipulate such an important fiscal tool for merely immediate ends and newspaper headlines. Nor can it stop funding, via the state-owned development bank, BNDES, a sector whose capital assets and main raw material are automobiles. The back-and-forth in excise tax rates has caused a sharp drop in the value of used cars since 2008 and hindered the financing of these vehicles, which is why the fleet is being swapped for new vehicles. The average age of our fleets was falling to almost 13 months when it was affected by the first reduction in excise tax in 2008, rising to its current 18 months. The crisis that followed left the sector vulnerable, and repressed growth. As soon as the rental and leasing sector began to stabilize, years later, another excise tax cut was introduced and our assets depreciated. How can this be handled? We are not suggesting an optimal tax rate because the competitiveness of the market already does that, but we are demanding that whatever the solution, it last for long enough and is planned. We are aligned with the automakers over the faster renewal of our fleets and also we agree with the National Automotive Vehicle Distribution Federation (FENABRAVE) on the renewal of the national fleet. Our rating with the banks is much higher because we have demonstrated our ability to generate cash flow and used car market now prefers its supply from rental or leasing companies because of their rarity and maintenance standards. We have done our homework. To build a rock-solid house we must lay the bricks in the right sequence. It will get us nowhere, putting up a tent, which solves the problem quickly but which is temporary and fragile. The government has the elements and figures to implement a long-term automotive policy, and it can count on the largest car consumers in Brazil. Admittedly, 2012 reduced our growth level, even though it was twice the country’s low GDP. But with this market’s torque, aligned with the right governmental measures, we will have a great chance for better growth in 2013. The continuity of the business...
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