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Government Promises Tax Incentives for Popular Cars, Focusing on 1.0 Flex Models and Sustainability Criteria, with Tax Reductions That Could Impact the Prices of the Most Affordable Vehicles in Brazil.
The expectation for the announcement of the federal government’s new program to incentivize the automotive sector is already moving the national market for popular cars.
The proposal foresees tax reductions, especially the Tax on Industrialized Products (IPI), for entry-level 0km vehicles.
The focus is to benefit models equipped with 1.0 aspirated engines and flex technology, in addition to meeting sustainability criteria defined by the so-called “Green IPI”.
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The goal is to boost the sale of affordable, less polluting, and more efficient cars, in line with the unprecedented Sustainable Car Program, which promises to stimulate the production and conscious consumption of automobiles in Brazil.
Criteria of the New Popular Car Law
Inspired by measures adopted in the 1990s, when then-president Fernando Collor de Mello reduced the IPI for cars up to 999 cc, the new program has an expanded approach, incorporating environmental and energy efficiency requirements.
The “Green IPI” prioritizes vehicles that use fuels with a lower environmental impact, such as ethanol, and that have high recyclability of materials.
Models with turbo engines, power exceeding 90 horsepower, imported vehicles, and those that do not meet recycling and efficiency requirements are excluded from the initiative.
Who Can Participate in the Sustainable Car Program
According to ongoing discussions at the Ministry of Economy and the Presidency of the Republic, all national vehicles with 1.0 aspirated engines currently in production can benefit from the new program.
However, 100% electric cars, despite their environmental appeal, have not been included among the beneficiaries, limiting access to IPI exemption to traditional flex versions.
According to industry experts, the measure aims to stimulate the renewal of the national fleet, reducing the average age of circulating automobiles and promoting more efficient and sustainable consumption.
Additionally, there is an expectation of increased competitiveness among manufacturers and, consequently, better price conditions for the end consumer.
Models Benefited by the New Popular Car Law
Among the eligible vehicles, the list of cheapest popular cars in Brazil in 2025 stands out, as all feature 1.0 flex engines and meet the program’s criteria.
Next, check the main models and how their prices change with the IPI reduction:
Renault Kwid Zen 1.0
The Renault Kwid Zen 1.0, which traditionally ranks among the most affordable cars in the country, has an original price of R$ 79,790.
With the 7% IPI exemption, the price drops to R$ 74,013.
The model features a 1.0 SCe 12V engine, 71 horsepower, and 10 kgfm of torque, along with items such as electric steering, air conditioning, four airbags, daytime running lights in LED, and a start-stop system.
The electric version, despite being less polluting, is not included in the program.
Fiat Mobi Like 1.0
Another highlight is the Fiat Mobi Like 1.0, with an original price of R$ 80,990, which goes down to R$ 75,321 without the IPI.
Equipped with a 1.0 Firefly 6V engine, 75 horsepower, and 10.7 kgfm of torque, this subcompact offers air conditioning, electric steering, stability control, steel wheels with hubcaps, and electric front windows.
The 2025 line brings updates in compliance with the new emission standards.
Citroën C3 Live 1.0
The Citroën C3 Live 1.0, the result of the C-Cubed project, has an official price of R$ 81,400, but with current discounts, it reaches R$ 73,990.
Without the IPI, the price would be R$ 75,702.
The engine is the same 1.0 Firefly with 75 hp, with a 5-speed manual gearbox.
Standard items include air conditioning, electric steering, tire pressure monitoring, stability control, and steel wheels.
Fiat Argo 1.0
In the compact hatch segment, the Fiat Argo 1.0 stands out with a price of R$ 91,990, which can drop to R$ 85,551 with the IPI exemption.
With a 1.0 Firefly 6V engine providing 75 hp and a 5-speed manual gearbox, the model offers air conditioning, electric steering, a trip computer, steel wheels, electric windows, and locks, as well as a height-adjustable steering wheel.
Peugeot 208 Active 1.0
The Peugeot 208 Active 1.0, recently restyled, has an official price of R$ 91,990, but is found for R$ 81,490 in promotions.
With the removal of the IPI, the price is R$ 85,551.
The hatch features a 1.0 Firefly engine with 75 hp, 15-inch steel wheels, air conditioning, electric steering, four airbags, and technological optional items.
Chevrolet Onix MT 1.0
The Chevrolet Onix MT 1.0 remains one of the best-selling cars in Brazil and, after recent engine changes, has a price of R$ 94,900.
With the reduction of the IPI, the price may drop to R$ 88,257.
The model features a 1.0 CSS Prime 12V engine, with up to 82 hp on ethanol, a 6-speed manual gearbox, six airbags, an 8-inch multimedia system, and electric steering.
Hyundai HB20 Comfort 1.0
Among the best-selling models, the Hyundai HB20 Comfort 1.0 costs R$ 95,790, dropping to R$ 89,085 with the new incentive.
The car features a 1.0 Kappa 12V engine, 80 hp, a 6-speed manual gearbox, six airbags, air conditioning, a trip computer, and a stability control system.
Volkswagen Polo Track 1.0
Closing the list, the Volkswagen Polo Track 1.0 has a value of R$ 95,790, reaching R$ 89,085 with the exemption.
The Volkswagen hatch is equipped with a 1.0 MPI engine with 84 hp, a 5-speed manual gearbox, air conditioning, electric steering, a radio with Bluetooth, and four airbags.
Duration and Effects of the New Popular Car Law
The federal government expects that the Sustainable Car Program, with the IPI exemption, will be valid until the end of 2026, when a new tax regime is expected to come into effect, possibly with a Selective Tax on consumption.
However, there is no guarantee that the tax reduction will be fully passed on to the end consumer.
Dealers and manufacturers, such as the Stellantis group, are already offering significant discounts through their official channels, which could impact the final amount paid by the buyer.
The official announcement of the new rules is expected in the coming weeks, according to sources linked to the government.
The expectation is that the initiative will bring renewal to the popular car segment, contribute to reducing pollutant emissions, and stimulate the use of renewable fuels, especially ethanol.
With so many changes on the horizon and potential benefits for those seeking a new vehicle, the question remains: will the new popular car law truly make entry-level cars more affordable and sustainable in Brazil? How do you assess the impact of these measures on your wallet and the future of the national automotive sector?
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