Following what might be termed ‘frank conversations’ between members, the AMIA (Spanish acronym for the Mexican Association for the Automotive Industry) has set export quotas for each automaker’s shipments to Brazil until 15 March 2015.
In 2002, Mercosur and Mexico signed an accord of a specific economical complementariness (ACE 55) for the automotive sector that indefinitely zeroed import duties among the five countries.
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Until 2006, Brazil set quotas for yearly exports to Mexico. Such quotas were matched in reverse but the Mexicans lacked the kind of products worth exporting back to Brazil.
The formula used for this year’s round considered the manufacturing base in the country of origin and the participation of each automaker in the last three years’ exports. Nissan earned the largest share (US$329m), followed by Ford and VW (both at $264m), Chrysler/Fiat ($256million) and GM ($226million).
Nissan, the biggest Mexican automaker, was not willing to relinquish its steep sales increase (77% in 12 months) thanks to the March (Micra) and Versa compacts. It has quickly climbed to 3.5% market share and seventh overall in the Brazilian sales charts in the first four months of 2012.
It is certain that it will face additional costs to import off-quota but that fits its commercial strategy. However, since Nissan will produce those two models in Brazil from 2014, it will be entitled to recover part of that extra expenditure.
According to the new Brazilian automotive regime rules, as Nissan goes on procuring ever more parts and components from suppliers here or within Mercosur, it will be granted compensation up to 50% of the additional 30 percentage points of IPI excise tax it must pay now if importing above the newly set quota. There is no refund of the 35% import tax on over quota vehicles, however.
