This September, the Brazilian government is to launch a new programme called “Innovate – Autoparts” (Inovar – Autopeças), aimed at stimulating the automotive parts sector. The main objective is to boost the technological content of components, thereby reducing imports of vehicle parts. This latest initiative will necessitate changes to the existing “Innovate – Auto” policy, which came into effect in January as a means of incentivising local production of finished vehicles.

According to Luiz Moan, president of the National Association of Vehicle Manufacturers (Anfavea), the programme will help stimulate domestic production of vehicle parts and also make local industry more competitive. In addition to working with Anfavea on the policy, the government has also consulted with the National Union of Auto Part Industry Manufacturers (Sindipeças).

As part of Innovate – Autoparts, a traceability programme for components will be established to determine where they are currently produced. This will allow non-Brazilian content to be identified with a view to switching this to local production.

Funding for the modernisation of this sector will come from the National Bank for Economic and Social Development (BNDES), while engineering support will come from a fund set up by the Brazilian Innovation Agency to finance studies and projects.

Local Production Arrangements (APL) for automotive parts will also be established in eight states, thereby creating a supply network for them across the country.

Manufacturers using locally-produced content will be able to obtain up to a 30% reduction in taxes if they can demonstrate that they comply with certain production stages in Brazil and/or use parts manufactured by the Mercosur.

A new system to be introduced by the Brazilian Agency for Industrial Development (ABDI) will directly monitor and audit the origin of parts and components used by the domestic industry.

Anfavea and Sindipeças stress the need for the electronic recording of any information. It will also be up to suppliers of parts and components to inform vehicle manufacturers as to the extent of non-locally produced content in anything that they supply.