The Brazilian government has dropped plans to help car manufacturers struggling with lower demand and growing inventories, according to sources close to the negotiations with banks and industry.
The talks were aimed at creating a guarantee fund to ease interest rates for car buyers but the measures have apparently been shelved after banks said the fund would have little short term impact on car loans.
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A slowing economy and the expiry of tax breaks have slowed the pace of car sales in Brazil. The government of president Dilma Rousseff, who is running for re-election in October, has little room to stimulate an economy that is expected to post a fourth straight year of slowing growth.
However, Brazil is close to finalising a deal to extend tariff free sales of cars and parts with Argentina for another year, according to government sources.
