Market and political issues explain R$11bn investments until 2030
03/06/2024
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Evandro Maggio — Foto: Divulgação
The circumstances that led Japanese automaker Toyota to announce an investment package of R$11 billion for Brazil until 2030, the largest in the company’s 66-year history in the country, include market and political issues. In an interview with Valor on Tuesday (5), following the announcement ceremony that took place at the Sorocaba factory, Evandro Maggio, Toyota CEO in Brazil, cited three factors that helped convince the company’s global leaders.
The first was related to the market. Toyota launched the first dual-fuel hybrid car manufactured in Brazil in 2019, a decision that was widely regarded as sound. The model was well accepted in Brazil and abroad, turning the automaker into the largest exporter in its industry. The car is exported to 22 countries.
Part of the new investments will be used to increase production capacity in Sorocaba, São Paulo, and to the development of two new dual-fuel hybrid vehicles. As it has been announced, the first model will be a compact car to be assembled from 2025 onwards. Toyota has not yet disclosed the second model it plans to release.
“We would love to talk about it, but it is still very confidential,” Mr. Maggio said. Asked if the announcement would possibly take place this year, the executive insisted that he could not provide further details.
The second key factor was the release of credits amounting to R$1 billion from Tax on Circulation of Goods and Services (ICMS) on exports by the carmaker that had been retained by the São Paulo state government. “The actions by the state government, with the release of the credits we had, were key to make such investment viable,” the executive said. Present at the ceremony, Governor Tarcísio de Freitas commented on the matter. “We released R$1 billion in ICMS credits to facilitate this investment.”
The third point mentioned by the CEO was federal government program Mover, aimed at decarbonizing the car industry. “We believe there is a [federal] government policy, with Mover, providing predictability and competitive conditions that help with demand,” he stated. Geraldo Alckmin, vice-president and minister of Development, Industry, Trade and Services, also participated in the event.
“The conditions are many. First, there is demand for our dual-fuel hybrid. And the adjoining conditions contribute to the investment. We cannot attribute it [the investment] to one single factor,” Mr. Maggio explained. Currently, 40% of production is exported and it could increase with the new plans.
Mr. Maggio was evasive when asked whether the extension of tax incentives for vehicles produced in the Northeast and Central-West regions, approved during the tax reform vote in December, had put the R$11 billion investment at risk. Toyota signed an open letter against the extension, along with Volkswagen and GM.
“Toyota values competitiveness on equal terms. We have always supported and encouraged competitiveness, but it has to be on an equal footing. We believe that from now on the conditions will be adjusted gradually,” he added.
The investments include an operational restructuring with the expansion and concentration of production in Sorocaba and the shutdown of the Indaiatuba unit, both in the São Paulo state. The relocation of operations will start in 2025 and is expected to be completed the following year. The automaker said the Indaiatuba unit’s 1,500 employees will have the opportunity to work in Sorocaba. “The investment will be in both bodywork and engines, to develop batteries for these vehicles and to relocate operations.”
(Lucas Ferraz contributed reporting.)
*Por Carlos Prieto — São Paulo