2023-08-22 22:25:40
By Alberto Alerigi
SÃO PAULO (Reuters) – Volkswagen (ETR:) Caminhões e Ônibus has sold 140 trucks to the heavy vehicle management group Vamos in a deal that includes Gerdau (BVMF:) as a recycling agent and takes place within the scope of the vehicle renewal program fleet captained by the federal government, the companies announced this Tuesday.
The program was launched via Provisional Measure by the federal government in June, with resources of 700 million reais that will be used in discounts on the prices of new vehicles, whose sales this year have been pressured in part by the mandatory exchange of technology that made vehicles more expensive in compared to the previous generation.
But the resources are finite and the president of Volkswagen Caminhões e Ônibus, a unit of the European group Traton, Roberto Cortes, predicts that they will be enough to boost sales until September only. After the end of resources, the program will be terminated.
The renewal program had a version focused on light vehicles, which ended in July after exhausting the 800 million reais in resources allocated by the government to stimulate the sale of new ones.
“Unlike the program for cars, the vast majority of resources for trucks have not yet been used because the program for them is more complex and has been regulated more recently,” stated Cortes. “We will (truck and bus sector) use resources probably until September… We are asking for the program to be perennial”, said the executive.
Under the agreement announced this Tuesday, Vamos will buy 140 trucks from VWCO and deliver 140 units over 20 years old as scrap to be recycled by Gerdau. Vamos said the trucks were purchased from self-employed drivers. The steel group will pay Vamos market prices for the scrap generated in the process, which in turn can be recycled in the company’s furnaces into products such as rebar used in civil construction.
The federal government’s scheme grants discount certificates – from 33,000 to 99,000 reais – on the purchase of new models for every old vehicle withdrawn from circulation.
The CEO of Vamos, Gustavo Couto, stated that the company, which has a fleet of around 35,400 trucks in the country, can save between 4% and 5% in the cost of acquiring a new model through the government renewal.
“It may seem little, but for us it helps”, said the Executive. “The idea is for the program to take place in stages. The first stage is to give visibility for the program to gain traction. It is a limited program and we would like it to be a public policy for renewing the Brazilian fleet”, added the executive when asked about the amount of resources made available by the government.
Each truck generates around 5 to 10 tonnes of steel scrap on average, say the executives. The price of the material is currently around 800 to 1,200 reais per ton, said Couto, citing that a new truck costs between 500,000 and 900,000 reais.
Cortes cited 2017 data from the National Land Transport Agency (ANTT) when commenting that the fleet of trucks with 20 to 30 years of use in Brazil is around 400,000 vehicles. The average age of the national fleet, according to Couto, is 21 years old, triple that of Europe and almost twice that of the United States.
Free fall
The partnership between the companies comes at a time when sales of new trucks in Brazil are suffering a 12% drop from January to the end of July, to just under 61,000 units, according to data from the association of assemblers Anfavea. The market situation made VWCO implement in May the suspension of employment contracts for about 30% of its workers at the Resende (RJ) factory complex until the beginning of September, said Cortes.
The commercialization of trucks and buses has been under pressure since the beginning of the year, when a rule came into force that obliges automakers to produce models with lower pollutant emissions through the so-called “Euro 6” technology, which made products more expensive by 15% in average compared to the previous generation, said the president of VWCO. The low economic growth combined with high interest rates has also discouraged license plates. According to the executive, stocks of “Euro 5” vehicles should run out in September.
In mid-July, rival Mercedes-Benz announced the sale of 110 buses and six new trucks to road transport company Suzantur, in what was considered by the federal government as the first significant sale of commercial vehicles within the fleet renewal program.
Cortes said that the trend for the heavy vehicle market in Brazil in the coming months is more positive, after the beginning of interest rate reductions by the Central Bank this month and the launch of the Growth Acceleration Program (PAC), which tends to encourage investments in economy.
Even so, he defended a more significant reduction in Finame interest, a BNDES line aimed at financing machinery and equipment and which is used by the vehicle sector in sales of trucks and buses. That’s because the fleet renewal program, in his assessment, serves “to help not further deteriorate sales”.
According to Cortes, Finame rates, which used to carry a differential of 8 to 10 percentage points in relation to market interest rates, are now only 1 to 2 percentage points lower. “It is no longer supplying the objective that was to promote the modernization of the machinery and equipment park in the country”, he said.
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