Automotive package decreases in size

The automotive industry aid package will be slimmer than initially thought. The idea of more flexible labor legislation to preserve jobs at automakers was retired. Also have been frozen, in the Government, discussions about an extension on the tax on industrialized products (IPI) on new cars.
The only two concrete measures must be summed up to the renewal of the automotive agreement with Argentina and an agreement with banks to boost credit to the purchase of vehicles, but there are still difficulties to close details. What you want, as direct auxiliary President Dilma Rousseff, is a "market solution" for the sector.
A broader plan than the so-called "lay off", already permitted currently, was prepared by technical area as a way to preserve jobs at automakers. He predicted reduction of up to half of the workday, with shrinking wages in 20%, to avoid layoffs. The difference between the work and the salaries would be split between Government and business. This plan, however, was dropped.
Authorities also refused to discuss now, with the National Association of Automotive vehicle manufacturers (Anfavea), the end of the discount at IPI. The last tax increase, in order to complete the recovery of the full rate, is scheduled for the 1st of July.
What should move forward is an agreement with Argentina, with new meeting scheduled for 27 and 28 of this month in Buenos Aires. To extend the automotive regime for another year and avoid the nightmare of fees in bilateral trade, the Brazilian Government is willing to accept a "flex" system closer to the Argentine proposal, which is 1.30.
IE: for every $ 1 million in Argentine vehicles exported to Brazil, may be shipped $ 1.30 million Brazilian vehicles to Argentina-and vice versa. The commercial exchange within that limit is exempt from the levying of import tariff of 35%. Until July of last year, the "flex" between the two countries stood at 1.95. Later, this restriction was imposed over free trade, which is now at risk with the end of the automotive agreement. The Brazilian authorities have admit a back in the system "flex" and try to push the number up, but recognize that it should be closer to the Argentine proposal.
A kind of "non-aggression pact", not necessarily written, is being discussed between the two countries. Today, the Brazilian cars represent about 50% of sales in the neighboring market. The promise is not to exceed this percentage to avoid barriers. On the bottom end, vehicles manufactured in Argentina are approximately 10% share in the Brazilian market.
The other measures contemplated by the Government to stimulate Bank lending, but who have not yet obtained approval from the Central Bank, was the reduction in the need for financial institutions capital requirement for acquisition of vehicles. According to the prudential rules in force since the end of 2010, car financing with a maturity of up to 60 months have 75% risk weighting factor, which amounts to 8.25% capital requirement. The Ministry of finance wanted to lower the percentage of 75%.
Stimulate the financing for the purchase of vehicles was one of the main focuses of the relief measures to the automakers. The diagnosis is that banks have the financing for the purchase of cars. Of every 100 queries would be discarding the granting of credit to 47 interested because these wouldn't risk criteria the system, either by default or inability to pay.
This led the Government to consider other initiatives to make the chattel mortgage. To comply with all the procedures set out in the code of Civil procedure, it takes up to two years, on average, to take the vehicle to delinquent customers. When the Bank comes to receive the well, he's already deteriorated. To shorten the deadlines, however, you will need to change the law, which is much more time consuming.