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24 March 2019 | AutoData EXCLUSIVE » GENERAL MOTORS Imagine, then, the relationshipwith us. It’s amazing. The friction in the negotiations has ended. And it [supplier] ended up acquiring a ticket to propose changes such as parts replacement, change of material or any other example that ge- nerates efficiency. Regarding the inefficiencies of Brazil: what you have been saying is nothing new. Abig problemof the industry’s profitability has to do with the country’s exchange exposure. To reduce this risk, which is the same as saying that my investments will have amuchmore predictable and stable return, I need to export. Export relevant volumes. And there will be competition with other factories in the world. In the current scenario we lose to everyone. To Mexico, Korea, Japan. We even lose to Europe. But it is not the only obstacle. Another big problem is the tax pressure, among other inefficiencies. Besides, there are companies that abuse the benefits and generate a huge cost for the indus- try. That’s not a novelty. We believe that this moment is the best opportunity we have to discuss. The new government wants a market opening. Not just in the automotive industry. An example ofmarket opening is the free trade with Mexico. That is a case which exposes our ine- fficiencies. Producing here or there and selling here, it doesn’t matter from the exchange point of view. I can make only one investment and export to Brazil be- sides other markets, since the costs in Mexico are more competitive from 20% to 25%. Not to mention the tax issue. The products are the same, the company is the same. Why would I invest in Brazil? But apolicytoopenBrazil’smarket seems inevitable in the short term. If that’s really the project for the coun- try, you need to work on enormous tax inefficiency. You have to start there. And then continue to adjust the lack of competitiveness. Because the way it is, even opening the market with Mexico is impossible. And how to do that? We could start with a program exclusi- vely for exporters. Creating conditions for those who export more than 50% of the volume or the value with differentiated collection.What can’t be done is to export tax burden. Do you believe that there would be op- portunity for companieswith that profile? The cost of the factory from the inside is not much different in Brazil compared to the rest of the world. With a competitive program for exporters we would isolate the exchange and have an industry with sustainable scale and profitability. And I refer to global profitability levels. Even so, the structural problems would remain still. We understand that a broad discussion about all the points that generate ineffi- ciency in the industry is something that will be on the table from one moment to another. We have several domestic pro- blems and the tax burden is one of them. We are saying that there is an opportunity to attack those problems and, if we look at it with the objective to increase the export vocation, we can generate a lot of investments. Whatwould be the impact of ameasure like that? If we have 60%, 65% of costs in reais and the rest in dollars, we need to export tho- se 40% in value to protect ourselves from the exchange rate impact. And it has to be extra-Mercosur export becausewe are trading currency that does not relieve the exchange pressure in the region. I want to reinforce that I amnot seeing all of that as an opportunity to grow. I am looking at that as an opportunity to define the vocation of the Brazilian industry.