Holden rethinks export program over raised import taxes

Holden and GM are deciding whether or not to trash their lucrative Commodore export program as a result of import tax increases in Brazil.

Holden currently exports 650 rebadged Commodores per year into Brazil.

Emily Perry, Director External Communications, Holden told Manmonthly.com.au that the increase in import tax outlined by the Brazilian Government will add thousands of dollars to the retail price of the car in that market, and this will obviously make it difficult for Holden to compete in the Brazilian market.

“The Brazilian move to protect their manufacturing industry highlights how competitive the global industry is, how protected other markets are and the challenges we face from high currency in Australia,” Perry told Manmonthly.com.au

Manmonthly.com.au reported on Friday that Brazil’s finance minister has announced a 30-point increase in the country’s industrial-product tax on cars, raising concern for some Australian automotive exporters. 

The tax was designed to protect locally-made cars, with those produced in Brazil, Mexico or the Mercosur trade block being exempt.

“Brazilian consumption has been appropriated by imports,” said the finance minister when announcing the tax.

According to Holden’s Perry, the company does not advocate a return to export tariffs ("far from it", she said), however this new raised tax will make it extremely difficult for Holden to continue exporting its cars into Brazil.

“Australia has one of the most open and competitive markets in the world – around 85% of new vehicle sales in this market are imported models,” said Perry.

“But at the same time, we are prevented from accessing other export markets – so it’s clearly not a level playing field.

“And the reality is that countries with a high-tech, automotive manufacturing industry either have tariff protections or supportive, significant co-investment policies. 

“What we’re calling for is a long-term policy that attracts continued investment in Australian manufacturing.”

Holden’s Commodores have been exported to Brazil since 1998, rebadged as Chevrolet Omegas. The cars, which are assembled at Holden’s Elizabeth, South Australia plant, are often purchased as official government cars in Brazil. 

The Omega was previously built by General Motors in Brazil, however the company halted production in 2007 in favour of imports from Australia – probably because design and development had become too expensive.

The latest model of the Omega, called the Omega C, is essentially a rebadged Holden VE Berlina, with the addition of a specially-tuned suspension to handle the poor-quality roads often found in Brazil.