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May 20, 2008

BRAZIL: Hyundai Tucson production starts soon

To the surprise of industry observers, Group Caoa has confirmed it will soon start assembling the Hyundai Tucson small SUV at its Anápolis, Goiás state, plant, 90 miles from Brasília, the nation's capital.

To the surprise of industry observers, Group Caoa has confirmed it will soon start assembling the Hyundai Tucson small SUV at its Anápolis, Goiás state, plant, 90 miles from Brasília, the nation’s capital.

The new plant began building the Hyundai HR light truck last year. Tucson assembly should start in the the second half of this year but the first locally-built units won’t go on sale until the first quarter of 2009.

The Tucson is currently the most popular fully imported SUV in Brazil – over 12,000 units were sold in 2007 and it’s retained its crown so far this year.

Group Caoa is funding the entire US$180m local production investment itself. It also imports Subaru and owns the country’s biggest Ford dealer network.

Competitive pricing has ensured the Tucson’s success here in Brazil. The rival Mitsubishi TR4, also assembled locally in Goiás state, sells for R$68,000 while the imported Tucson, though burdened with 35% import duty and freight from South Korea, sells for R$80,000.

So it appears that Hyundai Motor has absorbed part of the price difference, taking the upcoming   ‘localisation’ of production (with consequent duty and freight cost savings) into account.

Caoa has not revealed the initial local content percentage but fiscal incentives law here calls for 40% in the first year and 60% from the third year onwards.

Fernando Calmon

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