Anxious To Bring Chevy Trax To Brazil, GM Faces An Uphill Battle

From the initial conception of the all-new Chevy Trax a few years ago, General Motors has planned on making the subcompact crossover available in Brazil, as well as other parts of South America. Internally, the small CUV was heralded GM’s answer to Ford’s EcoSport offering, which dominates the segment in the country. But recently-passed trade barriers between Mexico, where the Trax commenced production in October, and Brazil have thrown a monkey wrench into those plans.

According to Reuters, Brazil renegotiated its trade agreement with Mexico this year and one of the areas that saw a change was Brazil’s ability to limit car imports while significantly increasing tax rates on foreign-made cars. The move is widely seen as an effort to protect Brazil’s industrial job sector, which has recently come under risk as the country’s economy entered a recession. Last year, GM announced voluntary buyouts for its manufacturing workforce in Brazil in an effort to lower its operating costs; 900 workers accepted the buyouts.

“That car was totally coming” to Brazil, said head of GM design in Brazil Carlos Barba. “It was done to be here. It is totally frustrating.”

The subcompact crossover segment in Brazil is one of the fastest-growing in the country that is the world’s fourth-largest automotive market. The Ford EcoSport, for instance, has sold more than 700,000 units since becoming available in 2003. A redesigned version of the car went on last month with a base price of roughly $26,000. Other segment contenders include the Renault Duster, as well as an upcoming entrant from Honda and Suzuki. Earlier this week at the Sao Paulo auto show, Volkswagen revealed the Taigun concept — a clear precursor to the automaker’s foray into the segment; the car could be built in Brazil.

According to a GM official speaking to Reuters on the basis of anonymity, The General will begin importing the Trax into Brazil by the middle of 2013, with plans to build the vehicle at its Sao Caetano do Sul plant in the long run — contingent upon a cost-effective deal with the plant’s union labor force.

For his part, GM’s Barba couldn’t go on record as to whether GM will manufacture the Trax in Brazil, but said “We are working on that. We have a plan. We’ll get there, but I cannot tell you the dates.” Barba also said that GM has halted programs for similar vehicles like the Trax twice in the past, while sales of its competitors, including Ford, flourished. “These guys are riding the wave for 10 years and we’re just looking at it,” he said.

“We are so late with the small SUV that we need to make it right,” said another GM official to Reuters. “We should have had a small SUV 15 years ago.”

The Chevy Trax utilizes a modified variant of GM’s global Gamma vehicle architecture shared with the Buick Encore, Opel/Vauxhall Mokka, and the Chevrolet Sonic. It was officially introduced last month at the Paris auto show, and will be sold in more than 140 markets worldwide. Mexico and Canada will be the first countries to receive the car, while the U.S. seems to be the only developed automotive market where the Trax will not be available.