Jaguar Land Rover has postponed its plans to build a new plant in Brazil due to the recent changes in tax rules for foreign companies.
JLR’s chief executive Ralf Speth announced that the company has halted the investment in Brazil after the court decided that regional governments in this country could not use tax breaks to attract investors to their states.
“The difference between importing cars or producing the cars locally all of a sudden disappeared, ” Mr Speth told journalists ahead of a launch of the company’s new Range Rover flagship sport utility vehicle.
In July JLR told journalists it plans to manufacture the Land Rover Freelander SUV in Brazil so as to avoid the high import takes that automakers have to pay for vehicles manufacture in other countries. JLR is currently manufacturing most of its cars at three plants in the UK, but plans to expand to other overseas markets due to increased demand. The company already assembles from kits the Freelander in India and it waits for Chinese government’s approval for a JV with Chery Auomobile to produce the Jaguar and Land Rover here.
As the Brazilian tax breaks have been withdrawn, JLR hopes that the authorities will come up with a new form of tax breaks and only then it will reconsider investing in this country.