Brazil’s new car prices are set to gradually rise starting Thursday as a nearly year long tax benefit draws to a close.
The industrial production tax, or IPI, was cut by the federal government in December in an effort to curb a rapid decline in car sales spurred on by the on rushing global credit crunch.
Car sales quickly recovered as auto makers passed on the IPI savings to consumers, resulting in as much as a 7.4% reduction in sticker prices on new vehicles.
“Our expectation is that the return of the IPI tax can gradually be absorbed by the market,” Rogelio Goldfarb, corporate affairs director for Ford Motor Company (F) in Brazil told the local Estado news wire on Tuesday.
“Of course, the return of the tax means higher costs for the consumer,” Goldfarb added.
Car sales are expected to hit or top 3 million vehicles in Brazil this year, according to calculations made by the Brazilian Automotive Vehicles Manufacturers Association, Anfavea. In 2008, Brazil sold around 2.8 million vehicles.
-By Kenneth Rapoza, Dow Jones Newswires
In a report released Tuesday, Brazil’s Federal Auditing Board, or TCU, found “major irregularities” in 63 public works projects, recommending a complete halt to work at 41 sites and a partial halt at 22.
The report was filed by the TCU with the Joint Budget Committee of Brazil’s Congress. The committee will review the report and can order full or partial suspension of work at any of the sites reviewed by the TCU.
The TCU report is an annual affair. Last year, the panel reviewed 153 projects, finding irregularities in 48. This year, the TCU reviewed 219 projects.
This year’s report found irregularities including overcharging by suppliers, signing of contracts with sub-contractors without proper bidding procedures, unwarranted cost overruns and many others.
A number of major projects could face at least a partial halt in construction activities. These include a major expansion of facilities at Sao Paulo’s International Airport and modernization work at oil refineries in the northeastern state of Pernambuco and the southern state of Parana.
-By Tom Murphy, Dow Jones Newswire
