Espírito Santo: Brazil’s Top Vehicle Importer

Despite not holding the largest vehicle fleet in the country, Espírito Santo, the smallest state in the southeastern region, stands as Brazil’s primary vehicle importer. This year alone, the value of cars brought into the state has exceeded $1 billion.

The gap between Espírito Santo and the second-ranked state, Minas Gerais, exceeds R$300 million. This is partly because Espírito Santo boasts a relatively high per capita income compared to other regions in the country, potentially resulting in greater purchasing power and increased demand for imports.

However, that’s not the sole reason for this phenomenon. The secret also lies in the state’s port infrastructure and incentives for imports provided by state legislation. In Espírito Santo, importers enjoy favorable ICMS (Value Added Tax on Sales and Services) rates, set at 4%, in contrast to the 17% levied in other states.

This creates a cascading effect since other taxes, such as PIS/COFINS and IPI (Excise Tax), use ICMS as the basis for their calculations, making importation a more advantageous business within the state.

The majority of vehicles arriving in Espírito Santo are of Chinese origin, differing from the overall data in Brazil, where 43% of imports come from Argentina. In the first three quarters of this year, Chinese automakers drove import growth, resulting in a 225% increase in imports.

Despite representing only 2% of the passenger car fleet, Espírito Santo accounts for nearly 30% of the entire financial volume of car import operations. This means that most imported cars enter through the state but are distributed throughout the country.

Arnaldinho Borgo, the Mayor of Vila Velha, explains that this high number is linked to the state’s strategic location and port infrastructure. “The possibility of reducing ICMS rates to just 4% in import operations undoubtedly makes Espírito Santo an even more competitive destination for national importers,” he says.

Companies such as GWM and BYD utilize the state’s ports as an entry point for vehicles in Brazil. “In 2012, South Korea led automobile imports through Espírito Santo […]. However, in 2023, China took the absolute lead in this segment, accounting for 41% of imports from January to September,” according to Borgo.

In the first half of 2023 alone, over 8,000 vehicles from China entered the domestic market through Espírito Santo ports. “The estimate is to bring in 15,000 Chinese vehicles, primarily from GWM and BYD, to the Vila Velha port complex by the end of the year,” says Carlos Eiras, President of the Brazil-China Chamber of Commerce.

Furthermore, Eiras emphasizes that Vila Velha’s strategic geographical location further underscores the region’s importance for import commerce. “The city is within a radius of one thousand kilometers from São Paulo, Rio de Janeiro, Belo Horizonte, Brasília, and Salvador: the largest consumer markets in Latin America.”

Source: ES 360

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