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Automotive Sector Warns That Tax Reduction for Chinese Manufacturer Could Lead to Mass Layoffs in Brazil
The possibility of the federal government reducing taxes on imported disassembled vehicles by BYD has raised an alert within the national vehicle industry. If the proposal advances, sector representatives foresee a mass layoff at the automakers already established in the country and a crisis in the investment cycle projected until 2030.
The measure is under analysis by the Foreign Trade Chamber (Camex) and could be voted on in the coming days. It proposes a reduction of the tax rate from 35% to as low as 5% for imported cars under the CKD or SKD regime — that is, in parts or partially assembled. The impact could be decisive for the future of the Brazilian automotive industry.
What Is at Stake in the Negotiation with BYD
The discussion revolves around the vehicle importation regimes CKD (Completely Knocked Down) and SKD (Semi Knocked Down), which are sent disassembled to Brazil and assembled in local plants. The proposal under analysis envisions a reduction of tariffs from 35% to 5% (CKD) and 10% (SKD) starting in July 2026.
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The companies established in the country argue that the measure disrupts competition by allowing manufacturers with low national integration to take advantage of benefits similar to those that invest locally in development, production, and supply chains.
Letter from Manufacturers and Reaction from the Auto Parts Sector
On July 15, Volkswagen, Toyota, Stellantis, and General Motors sent a direct letter to President Luiz Inácio Lula da Silva, warning that the incentive to BYD could compromise the national production structure and lead to mass unemployment.
The document classifies the proposal as a threat to the “virtuous cycle” that attracted R$ 180 billion in new investments.
Subsequently, Abipeças and Sindipeças, which represent auto parts manufacturers, reinforced the criticism in a letter sent to Camex. For the entities, BYD’s request is “unwarranted” and contrary to the public interest.
They argue that industrial policy should preserve jobs and local innovation instead of rewarding low value-added operations.
What BYD Says
In a statement, BYD denied that it is seeking tax benefits and classified the criticisms as “resistance to innovation.” The Chinese automaker claims that its business model represents a “vision for the future” with clean, connected, and accessible cars.
According to the company, the discussion is not about assembly or taxes, but rather about “the loss of prominence” of traditional automakers. BYD argues that the tariff reduction would allow for acceleration of the transition to electric vehicles in Brazil, with greater competitiveness and access for consumers.
Impact Could Affect Supply Chain and Layoffs in the Sector
The automotive sector fears that the measure could stimulate a superficial industrialization model, where companies merely finish products with few local steps, affecting thousands of direct and indirect jobs in areas such as welding, painting, stamping, and parts supply.
Moreover, the instability in incentive rules could undermine announced investments for modernizing factories, nationalizing components, and researching electric mobility. The Camex decision is seen as a turning point for the industry established in the country.
This change could make cars cheaper, but does it offset the risk of losing jobs in the national industry? Do you agree with BYD’s argument or support the automakers established in Brazil? Share your thoughts in the comments — we want to hear from those who live this in practice.
A aceitação dessa proposta da BYD será o fim da indústria automotiva hoje existente, não só das montadoras mas também das inúmeras indústrias de auto peças.
Essa parceria com a china vai dar uma **** muito grande, só o pobre trabalhador que se arrebenta.
O Xi Jinping já soltou a mão do caçaceiro, nenhum presidente com Sá consciência vai fazer seu povo sofrer, mas o caçaceiro vai com certeza