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Sustainable Car Program and Green IPI Zero or Reduce Tax for 1.0 Flex Cars Produced in Brazil, Lower Prices by Up to About R$ 13 Thousand, and Make Sales in the Category Grow, But Raise Doubts About Who Profits More from the Green Discount.
The 1.0 flex popular car market is turning around in 2025. The reason is the Sustainable Car Program, which created the so-called Green IPI and reduced or eliminated the Tax on Industrialized Products for models considered more efficient and ecological.
In practice, the discounts reach several thousand reais and are already affecting the Brazilian consumer’s pocket.
According to the Ministry of Development, Industry, Commerce and Services (MDIC), the new tax policy mainly benefited compact 1.0 cars produced in the country, which meet strict criteria for emissions, weight, recyclability, and safety. In some cases, the price reduction exceeded R$ 10,000, making these models more competitive against used cars and other segments.
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The effect showed up quickly at dealerships. Data from July 2025 indicates that 1.0 vehicle sales grew by about 13% compared to the previous period, driven precisely by the Sustainable Car Program and the new Green IPI table. According to specialized reports, at least five entry-level models had their taxes eliminated and led this movement.
At the same time, curiosity around the so-called “1.0 cars with green discount” grew. Models like Fiat Argo, Fiat Mobi, Hyundai HB20 and HB20S, Volkswagen Polo Track, and Renault Kwid have started to appear on lists of best-sellers and best deals for those looking for economical cars in 2025.
How the Sustainable Car and Green IPI Work in Practice
The Green IPI is a mechanism that adjusts the tax rate according to the vehicle’s sustainability level. The new table starts from a base rate of 6.3% for passenger cars, which can drop to zero or increase based on performance in criteria such as CO₂ emissions, energy efficiency, power, safety, and recyclability.
Within this system, the government created the Sustainable Car category, aimed at compact and lighter vehicles. To qualify, the model must be manufactured in Brazil, have a 1.0 flex engine with power of up to about 115–115.5 hp, and meet emission limits (such as less than 83 g of CO₂ per kilometer), in addition to using a high percentage of recyclable materials.
According to Agência Brasil and the Planalto itself, the idea is to reward cars that pollute less and consume less fuel, while strengthening the national industry.
Automakers that adapt their projects to meet the new rules receive the benefit of reduced or eliminated IPI, which allows them to pass part of this advantage to the final consumer in the form of discounts.
1.0 Models That Benefited Most from the Green Discount
Among the cars riding this wave of the green discount are some well-known names to the Brazilian public. The Fiat Argo 1.0, for example, recorded a strong increase in sales in 2025, thanks to a combination of equipment, balanced consumption, and more competitive pricing after the IPI reduction.
Another highlight is the Fiat Mobi, which has established itself as one of the cheapest cars in Brazil. Specialized reports point to price drops nearing R$ 13,000 in some configurations, depending on the region and commercial campaigns, keeping the model as an entry option for those prioritizing city economy.
The Hyundai HB20 and the sedan HB20S 1.0 also appear among the beneficiaries, with IPI reductions and significant discounts at dealerships. According to a survey by Estadão E-Investidor, 1.0 versions of these models had price cuts of several thousand reais, reinforcing their appeal in comfort, interior space, and energy efficiency for families seeking a new car without exceeding their budget.
At Volkswagen, the Polo Track 1.0 has become a kind of “darling” of the program. Credentialed by the MDIC for zero IPI in different versions, the hatch has gained a reputation for good cost-benefit by combining an efficient 1.0 engine, updated safety package, and lower final price after the tax incentive.
Meanwhile, the Renault Kwid 1.0 remains among the least expensive eligible for the Sustainable Car Program. Even with criticism of its simple finish, the model stays competitive due to its low fuel consumption and reduced price, keeping it in the spotlight among app drivers, fleet owners, and consumers buying their first car.
Advantages, Limits, and Critiques of the “Green Discount” for 1.0 Cars
On the positive side, the Sustainable Car Program has lowered the entry price of several 1.0 popular cars, bringing the dream of a brand-new vehicle closer to a larger segment of the population. With the exemption or reduction of IPI, the final value is lower, financing installments decrease, and the fleet tends to renew, taking older, more polluting vehicles out of circulation.
Mobility specialists highlight that the Green IPI also creates a structural incentive for automakers to invest in cleaner technologies. Criteria such as energy efficiency, active safety, and component recycling now count for points in the tax rate calculation, which can accelerate the adoption of more modern solutions in production lines based in Brazil.
However, the “green discount” is far from being a consensus. Critics point out that the biggest beneficiaries, at least initially, would be the automakers themselves, who gain significant tax incentives and can calibrate how much of that advantage is genuinely passed on to the consumer. Some analyses show that even without complete tax exemption, certain manufacturers were already offering significant discounts on their own.
Another controversial point is the program’s criteria. Since the rule requires the car to be produced in Brazil and meet specific motor, weight, and category criteria, imported models and even some more technological vehicles are left out or face barriers to adaptation, reducing direct competition within the benefited range.
There are also those who question the fact that more expensive electric and hybrid vehicles are not the main focus of the Sustainable Car Program. Part of the rules prioritizes compact flex 1.0 cars, reinforcing the segment of popular cars, but this may delay the mass adoption of completely clean technologies unless specific complementary policies for these models are implemented.
What to Expect from the Future of Sustainable Mobility in Brazil
For the federal government, the Sustainable Car and Green IPI are just the first step of a larger strategy linked to the Mover (Green Mobility and Innovation) program. The goal is to make Brazil a reference in the production of more efficient vehicles, with decarbonization targets aligned with discussions at COP30 and international climate commitments.
In the coming years, the trend is for more automakers to adjust their 1.0, hybrid, and even electric cars to gain points in the Green IPI bonus-malus system. This includes investing in more economical engines, weight reduction, new recyclable materials, and active safety packages, which can elevate the technological standard of Brazilian popular cars.
For the consumer, the big question will be to evaluate whether the green discount truly compensates when compared to other market offers, such as factory promotions, low-mileage used cars, and mobility alternatives like apps and public transport. The way banks and automakers handle the financing and insurance of these vehicles should also weigh in the final calculations.
In the end, the success of the Sustainable Car Program will depend on a balance between tax benefits, actual price reductions, and concrete environmental gains. If 1.0 cars with green discounts are merely a marketing strategy to clear inventory, the disappointment could be significant; if they actually deliver savings and a lower environmental impact, they could usher in a new phase for popular cars in the country.
In your opinion, is the green discount for 1.0 cars a real advancement for the pocket and for the environment, or just another program that benefits automakers in a year of international showcase for Brazil? Let us know in the comments if you plan to take advantage of the Sustainable Car Program or if you prefer to invest in used cars.
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