Brazil is about to launch a new program called "Sustainable Car" (Carro Sustentável) aimed at exempting the Industrialized Products Tax (IPI) for new vehicles produced domestically in Brazil that meet sustainable standards. The core objective of this program is to incentivize consumers to purchase 1.0-liter displacement gasoline and ethanol flex-fuel engine vehicles that meet specific energy efficiency and sustainability standards. This information was disclosed by the "São Paulo State Gazette."

According to Zhongjin's understanding, under this tax exemption program, the new tax reduction policy will apply to vehicles that meet the following criteria:

Vehicles equipped with a flex-fuel engine with a displacement of 1.0 liters and a maximum power not exceeding 90 horsepower.

Vehicles produced domestically in Brazil.

Vehicles emitting a maximum of 83 grams of carbon dioxide per kilometer during operation, demonstrating low pollution emissions.

Vehicles that also meet the relevant standards for "recyclability" (this standard is still under development).

Vehicle types not included in this program are:

Pure electric or hybrid models.

Imported models.

Vehicles with turbocharged engines, even if they have good fuel efficiency and emissions, are excluded from the tax exemption program.

Expected vehicle models to be included in the IPI tax reduction scope include Chevrolet Onix, Fiat Argo, Hyundai HB20, Renault Kwid, Volkswagen Polo, among others. Some versions of these models with 1.0 naturally aspirated flex-fuel engines meet the aforementioned tax exemption criteria.

This tax exemption measure is expected to continue until December 2026. The Brazilian government aims to boost domestic car sales through this policy, mirroring the sales incentive effects brought about by the "Affordable Car Decree" enacted in 2023. Beneficiaries of the car purchase incentives include individual consumers and corporate users.