Following the introduction of preferential taxation for products shipped between Mexico and Brazil, Honda this month will move production of Accords destined for Brazil from North America to Mexico.

Brazilian import duty on cars from the US is 35 percent but the new preferential tax on cars shipped between Brazil and Mexico has been reduced to eight percent.
Honda also plans to start Civic exports from Mexico to Uruguay and Paraguay around mid-year.

This is because the Mercosur common market alliance of Argentina, Brazil, Paraguay and Uruguay stipulates that when a trade imbalance between any of the four countries exceeds five percent, a 25.4 percent import tariff will be applied.

Honda could not avoid a trade imbalance between Brazil and Argentina because its vehicle exports from Brazil have recently increased greatly.

The company said on Wednesday that it plans to nearly double car output in Brazil to 40,000 in calendar 2003 from 20,628 in 2000.

To view related research reports, please follow the links below:-

Mercosur's Automotive Industry - Challenges and prospects to 2005

Global Car Forecasts to 2005

Honda Strategic Review