CEO for Latin America argues that competing with Chinese rivals doesn’t depend on tax timing

06/28/2024

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Guy Rodríguez — Foto: Gabriel Reis/Valor

Automotive industry leaders have recently mobilized to urge the government to reconsider the gradual increase in import taxes for electric cars and instead implement the maximum rate of 35% all at once. However, Guy Rodríguez, CEO of Nissan Latin America, believes that competing with Chinese rivals is independent of the timing or method of tax hikes. “We are not concerned about whether the tax rates will be advanced or delayed; what matters is having clear and fair rules,” he said.

Mr. Rodríguez stated that Nissan will stick to its investment schedule, totaling R$2.8 billion from 2023 to 2025, reinforced at the end of 2023. “We won’t change anything. Even if 10 more competitors arrive, new manufacturers setting up factories are welcome. We need to be smarter,” he emphasized during a visit to the company’s office in São Paulo on Thursday (27).

Mr. Rodríguez, an Argentine executive managing Nissan’s Latin American operations in Mexico, noted that the Mexican market is open with numerous importing competitors. “Yet Nissan, which produces locally, has been the market leader for 16 years with a 17.5% share,” he highlighted.

He also mentioned that the Japanese brand already competes with Chinese manufacturers in China, where it also makes cars. “Of the 3.4 million vehicles produced globally by Nissan in 2023, 800,000 were in China,” he said.

The Brazilian Association of Importing and Manufacturing Automotive Companies (ABEIFA) criticized the request for an immediate increase in the import tax for hybrid and electric vehicles to 35%. The association called for predictability in automotive industry policies, particularly out of respect for consumers who have the right to choose advanced technologies.

At the end of 2023, the government decided to resume the import tax on fully electric cars, suspended since 2016, and increase the tax on hybrids. The increase was planned to be gradual over two years, starting in January with 12% for hybrids and 10% for electrics. In July, it will rise to 25% and 18%, respectively.

Further increases are scheduled for July 2025 and July 2026, at which point all imported cars from countries without free trade agreements with Brazil will be subject to the maximum rate of 35%.

“Any additional measures would break rules and contracts. The Brazilian government has repeatedly stated in international forums that Brazil has stable and predictable regulations,” said Ricardo Bastos, president of the Brazilian Electric Vehicle Association (ABVE).

The initial tax increase was not sufficient to curb the influx of Chinese products. These brands have strengthened their inventories and continuously launched new models, attracting consumers with advanced technology.

The aggressive competition from Chinese brands, particularly in electric vehicles, does not concern Nissan, which prefers to maintain its cautious and steady approach. If the strategy was not successful, said Gonzalo Ibarzábal, CEO of Nissan Brazil, “the brand’s sales would not have increased by 35.2% last year, almost three times the growth of the national market for cars and light commercial vehicles.”

Nissan’s new investment cycle will expand its portfolio. The Resende factory, in the Rio de Janeiro state, will produce two new models. The first, a new generation of the small SUV Kicks, will be launched in 2025. Its successor will be larger, according to Mr. Rodríguez. Later, a new sports utility vehicle will be produced, although Mr. Rodríguez did not disclose details. A new turbo engine is also planned.

The third stage of product renewal will involve producing a new pickup at the Argentine factory. According to Mr. Rodríguez, 80% of the work to prepare the Resende plant for the new lines is already complete, and the employees have been trained.

With new products, Nissan aims to double its market share in Brazil, compared to 2023, reaching 6% in 2026. “We will be bigger,” said Mr. Rodríguez, undeterred by the threat of new competitors.

Additionally, the new vehicles will expand Nissan’s export market. Mr. Rodríguez expects to sell the new SUVs in 20 Latin American countries. Exporting, he said, is a way to achieve “stability against currency fluctuations.”

Nissan’s management did not provide any hints about when it plans to start producing electrified cars in Brazil, a decision already signaled by the company. There is an expectation that models with the e-Power technology, already a reality in Mexico, will eventually be produced in Brazil.

The e-Power technology features both a combustion engine and an electric motor. Unlike conventional hybrids, the combustion engine is not used for traction but exclusively to “fuel” the electric motor, meaning the car runs solely on the electric system. “We will announce [the electrification] at the right time when everything is aligned internally,” Mr. Rodríguez said.

Nissan’s Latin American leadership seems to have reached a more comfortable position following global changes in the alliance between the Japanese company and Renault and Mitsubishi.

At the end of 2023, the companies involved in the 1999 alliance announced the separation of their purchasing departments. “Each now buys its parts,” Mr. Rodríguez said, noting that this does not mean the alliance has ended.

The decision grants each alliance member more independence. “We are an economic group,” Mr. Rodríguez said.

When announcing the change, the group highlighted that markets are becoming increasingly regional and that the idea is to leverage each company’s strengths, technical funds, and experience.

The alliance will no longer be led by a single executive, as it was during the time of Carlos Ghosn, the Brazilian who conceived the union of these companies and became their leader.

Ghosn was arrested in Japan in November 2018, accused of misusing company assets for personal gain. The following year, while under house arrest, he fled, hiding in a large musical instrument case, and sought refuge in Lebanon, where he lives to this day.

*Por Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/