Mahindra & Mahindra, leading SUV makers in India, are thinking of setting up a new manufacturing plant in Brazil. This decision follows the offer of tax sops by Brazil’s Inovar Auto incentive program announced at the end of 2012 and valid till 2017. Though, there is no timeframe yet, as Reuters pointed out in their story today.
As per the report in Financial Express, Brazil has introduced certain taxes on companies with not enough local consideration and value additions. These tax barriers would otherwise make products uncompetitive in the Brazilian markets and hence the need for a new manufacturing base.
Mahindra & Mahindra looks forward to taking advantage of these new tariff barriers introduced in Brazil which is offered to automakers sourcing parts indigenously and opting for local product development strategies. M&M’s presence in Brazil is dominated by the Scorpio SUV and Pick-up. These two models are produced in association with local partners, Bramont with a plant in Manaus.
These plans are yet to be finalized but considering that Brazil is a good market and the fact that M&M will be working along with Inovar, it should not be long before the new manufacturing plant comes into effect. However, M&M could be viewing location of the new plant closer to major markets of Sao Paulo and Rio de Janeiro as against a plant in Manaus so as to take advantage of reduced logistic costs.