Many people have noticed that buying a brand new car costs more in São Paulo. 

However, there is a whole story behind this situation. 

But unfortunately, it's not only in São Paulo that vehicles are expensive. 

Today, Brazil is among the countries with the most expensive cars in the world. 

Taxation, bureaucracy, and a series of impositions are behind these high prices. 

Furthermore, Brazilians have been suffering greatly from other issues. 

The fluctuation of the dollar, along with the shortage of parts caused by the pandemic, has also been affecting the price of vehicles. 

So much so that, due to the lack of brand-new cars available on the market today, used and nearly new cars cost more than a new one. 

However, when you know where to look, vehicles can be found at more affordable prices. 

A brand new car costs more in São Paulo, but this is something that can be overcome in a rather clever way. 

So today you're going to find out why brand new cars are more expensive in São Paulo! 

Let's find out once and for all?

As we've shown, and as many people have noticed, car prices in Brazil continue to rise. 

Although a brand new car costs more in São Paulo, throughout the country it's increasingly expensive to buy a vehicle. 

However, this price increase has a logical explanation, as well as a number of reasons.

Therefore, our experts have identified the main reasons why car prices have increased.

So, shall we check it out?

The shortage of microprocessors, which are produced in Asia, has caused the disruption of many vehicles in Brazil throughout this year. 

A classic example was the Chevrolet Onix.

Once the undisputed sales leader, the hatchback had its production halted for almost 4 months. 

Thus, due to the lack of availability of brand-new vehicles at dealerships, the large supply and low demand are driving prices up. 

Today, most people who choose to buy a brand new car face a waiting list.

This is not the case for those looking for nearly new or used cars. 

Therefore, with the increased demand for used cars, prices have gone up for everyone! 

In São Paulo, brand new cars cost more, as do used cars. 

With an increase in demand for used and nearly new vehicles, the inventory ended up decreasing. 

After some research, our experts found an answer to this:

The turnover of used vehicles, which is simply the time between purchase and resale, has decreased. 

This turnover was higher two months before the pandemic.

However, due to the shortage of new vehicles, this cycle time has dropped to approximately 30 days. 

Therefore, it's possible to conclude that there is a demand! 

Whoever has stock, sells! 

But since it's much harder to replace the sold vehicle, the price naturally goes up.

In other words, the logic is as follows:

Want a car? Be aware that you'll have to pay more for it! 

After a period of stagnation, the economy is showing some signs of recovery. 

Today, the classic signs that this is happening are a slight increase in consumption and demand for products and services. 

And this also applies to automobiles. 

So, here we return to the traditional rule of the market.

In other words, the law of supply and demand!

When there is demand and a lack of supply, a rise in prices is to be expected. 

Still considering the pandemic, those who maintained income during this turbulent period are planning to buy their own car. 

This is to avoid public transportation and stay safer from a health standpoint.

Therefore, prices remain high. 

In addition to the shortage of electrical semiconductors that made vehicles more expensive, a range of inputs and services for vehicle production also became more expensive. 

And as always, this cost is passed on to the end consumer.

In other words, everyone who wants to buy a car! 

Over the course of a year, the price of steel, a key component in vehicle production, increased by 61%. 

Furthermore, resins and elastomers rose by almost 70%.

And it doesn't stop there. 

Freight rates for vehicle transport, both air and sea, increased by 105% and 339% respectively. 

And finally, we have electricity. 

Due to the lack of rain and the need to activate thermoelectric power plants, electricity has become more expensive. 

Thus, with more expensive electricity for production, we also have more expensive cars. 

Although it's a sad thing, this is our current reality. 

One of the reasons why a brand new car costs more in São Paulo is precisely the ICMS tax. 

Although many people don't know it, ICMS – the Tax on the Circulation of Goods and Services – varies from state to state. 

And starting April 1st of this year, the tax amount increased. 

The rate, which was previously set at 13.3%, will increase to 14.5%. 

In the rest of Brazil, the rate is fixed at 12%. 

This automatically makes a brand new car more expensive in the state of São Paulo. 

Although the percentage seems small, in the end those extra “2.5%” can represent about R$ 1 thousand in the final value of the vehicle.

It's also important to mention that this increase is proportional. 

Therefore, the higher the market value of a car, the higher the price will be in São Paulo. 

In compensation, the government reduced the ICMS tax for used and nearly new vehicles. 

As of April 1st, the IMCS for this class of vehicles, which was 5.3%, decreased to 3.9%. 

Although this is a beneficial incentive, as we have seen, the value of used cars has not decreased that much! 

The answer to this question is quite controversial.

I.e…

Our experts say yes and no.

Although a brand new car costs more in São Paulo, it is not necessarily more expensive than in other places. 

It sounds confusing, but it's actually quite simple! 

Even with a higher ICMS (state sales tax), the state of São Paulo is known for being a powerhouse in terms of business. 

In this way, even though it theoretically has the most expensive new car in Brazil, the high level of competition ends up lowering the price.

However, this doesn't mean that there aren't places where cars are cheaper or more expensive around here. 

Now that you know why a brand new car costs more in São Paulo, we have a special tip for you. 

Have you ever stopped to think if there's a city considered the best for buying cars in Brazil?

Whether you've thought about it or not, the truth is that it exists. 

In other words, after much research, our experts have managed to identify the best city in Brazil to buy a car.

Do you want to know which city this is?

So, just click the button below to find out and then start saving.