Tuesday, February 17, 2009

Buy American

I really have a hard time understanding the concept of Buy American, why?
Because today, GM, Ford and Chrysler have a lot of unsold cars all over the patio in the US and although many of those cars are flex fuel capable why they are not sent to be sold in Brazil at very aggressive prices?
An example would be a F150, which has an average cost in the US of $ 15,000.00, a car like this in Brazil is sold easily for $ 60,000.00 by independent dealers, if Ford were to bring those cars directly to the local market they would be able to sell them for $ 30,000.00 with a very healthy margin and would increase the demand since the price would be much lower.
American made flex fuel cars can be easily adapted to run on 100% ethanol fuel so this is not a very complex problem.
Interest rates in Brazil for financing vehicles are somewhere between 0.99% per month to 3.5% per month, much higher then the current US rates.
Today american automakers are selling cars for anything just to get rid of them, those same conditions are not needed in Brazil and at the same time there is a huge demand for cars with better options then the existing offers in the Brazilian market, so why it is so difficult for Detroit to look down to South America and start selling those cars in Brazil.
Brazil won't buy all the excess supply, but can help reduce this excess and we all know that on times of shortage every point can make a difference.

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