BorgWarner expects to benefit from new regulations in Brazil, Inovar-Auto, which encourage investment in the local production and engineering in the Brazilian automotive market, according to a press release. In April 2013, the US supplier opened a manufacturing facility and engineering centre in Itatiba City (Brazil) to support automakers to meet new regulations which require automakers to increase local content over the next five years. The new plant produces turbochargers, viscous fans and fan drives, engine timing systems and emission technologies.
“The increasing demand for our fuel-efficient powertrain solutions is driving significant growth for our business in Brazil. The new Brazilian regulations coincide with BorgWarner’s global growth strategy – engineering advanced technologies to improve fuel economy, reduce emissions and enhance performance,” said James R. Verrier, President and CEO, BorgWarner. “With our new facilities and nearly 40 years of market experience in Brazil, BorgWarner is well-positioned to adapt production and introduce new technologies to serve our customers’ needs quickly and efficiently.”
Significance: In April 2012, Brazil announced a new plan, Inovar Auto, for automotive industry players for the period 2013-17. Under the new plan, automakers will be eligible for an industrialised products tax (IPI) rebate of up to 30%, depending on the level of local sourcing. As local sourcing content increases, the IPI level will decline. Furthermore, companies that invest in engineering and R&D efforts in Brazil can get an additional rebate of 2%. The programme is expected to result in investment of more than USD50bn in the Brazilian automotive industry, according to media reports.
BorgWarner expects new regulation to result in a sharp increase in vehicle production in Brazil. According to IHS Automotive, light vehicle production in Brazil is forecast to increase from 3.18 million units in 2012 to 4.28 million units in 2017. The regulation also requires a 12% average reduction in fuel consumption in cars and light vehicles by 2017. This is expected to result in greater demand for engine and drivetrain technologies products by BorgWarner which help automakers to significantly reduce fuel consumption and emissions. The company which has been present in Brazil for nearly four decades is a major supplier of turbochargers, fans and fan drives.
