Fuel economy in Brazil

 Just over 2.6 million light-duty vehicles (LDVs) were sold in Brazil in 2019, marking a gradual rebound following a contraction from a high of 3.6 million sales in 2012 to a low of less than 2.0 million in 2016. Average fuel consumption of new LDVs fell from 8.5 litres of gasoline equivalent per 100 kilometres (Lge/100 km) in 2005 to reach 7.5 Lge/100 km in 2019, which is 5% above the global average. While the overall fuel consumption of new LDVs has decreased on average 0.8% annually since 2005, reductions have not occurred unilaterally across all LDV segments.

The fuel economy of city cars, which accounted for 52% of LDV sales in 2019, has improved the most of all segments in Brazil, falling at an average rate of 1.4% per year between 2005 and 2019, while the fuel consumption of large cars grew over this time period. Despite city cars having claimed the majority of the LDV market since 2005, sales shares have been slowly shrinking while shares of SUV/pick-ups have grown from 10% of the market to 35% in 2019. The average weight of vehicles remains 15% below the global average, yet has grown 10% from 2005 to reach 1 261 kg in 2019.

Flexfuel powertrains in each vehicle segment have experienced the most rapid decrease in fuel consumption compared with gasoline, diesel and other powertrains. As a result of regulations introduced in 1975, flexfuel vehicles have dominated the LDV market, and were 86% of LDV sales in 2019. The market for gasoline vehicles has fluctuated in Brazil, where sales shares spiked to reach 12.8% in 2017 but have since dropped to 4.1% in 2019. Sales shares of electric, plug-in and hybrid vehicles each remained below 1% in 2019.

In 2012, the Brazilian government approved the “Invar-Auto” programme, under which automakers could qualify for up to a 30% tax reduction for meeting corporate average vehicle efficiency targets. The programme, which was phased out in 2017, required automakers to improve corporate average vehicle efficiency of new LDVs by 12% from 2012 levels by 2017. In 2018, “Rota 2030” was introduced and established mandatory requirements for adhesion to Vehicle Labelling Program (PBEV), and a commitment to achieve minimum vehicle energy efficiency and safety levels. Starting in 2022, an 11% improvement target in fuel consumption over 2017 levels is set for new LDVs.

Since 1975, the Brazilian government has promoted biofuels. In 2005, Biodiesel in the Brazilian Energy Mix was passed, which mandated minimum requirements for blending biodiesel with petroleum-derived diesel. Increasing blending ratios have been mandated in Brazil, and a 2018 resolution set blending ratios at 11% in 2019, 12% in 2020, and 13% in 2021, 14% in 2022 and 15% in 2023. However to protect biodiesel prices from rising due to shortages in biodiesel feedstock, the 13% blending mandate for 2021 was dropped to 10%. Brazil has also granted exemption from the Tax on Industrialized Products (IPI) levied on the manufacture of electric or hybrid ethanol cars.