A sample: Tesla x Jaguar! The NAX’s 4 Steps method doing American Companies Efficiently Export to Brazil
We provide here a case study to explain how using our 4 steps (https://www.linkedin.com/pulse/how-american-companies-can-efficiently-export-brazil-vieira-barros/) would help a company establishing or increasing exports to Brazil.
Hypothesize that Tesla is planning to start exporting to Brazil. In the U.S., a 2019 Tesla Model X has a MSRP of $84,000. (KBB, Tesla, 2019) The 2019 Jaguar I-PACE EV400 SE is considered a competitor to Tesla because both cars are electric SUVs. Jaguar has a MSRP of $77,000. (KBB, Jaguar, 2019)
At first, Tesla could deem reasonable to export its 2019 Model X to Brazil for half of the price it is sold in the U.S. ($ 42,000) to account for the same amount in taxes and reach the Brazilian market with the same American’s market price. However, as it will be clear from the explanation below, by adopting this blind strategy Tesla would be setting this attempt to enter the Brazilian market to be a failure.
If Tesla hires NAX CORPORATION to offer Steps 1 and 2 (real market size and how competitors works), Tesla would receive a report getting info like the one below:
Brazil’s Customs – March, 2019
NCM code (like HTS Code): 8703.80.00
Origin: United Kingdom
Acquisition: United Kingdom
Brand: JAGUAR
Model: Jaguar I-PACE E400 SE
Year: 2019
Port of Destination: Rio de Janeiro’s Port
Amount declared per each car: $31,000 to $32,500
Quantity: 20 units
Incoterm: CFR
From this report Tesla would learn that the product of its competitor (Jaguar I-PACE EV400 SE) is currently imported into Brazil. Tesla would also know that just in March of 2019, 20 units were imported and the price declared was around $31,500. With this important information, it would be clear that the proposed price to export Tesla Model X to Brazil was 33% more than Jaguar’s ($42,000 vs. $31,500). As Brazil is a country with many taxes, paying 33% more than a competitor would lead Tesla to lose money quickly and being unable to compete against Jaguar (United Kingdom).
An American company that exports to Brazil with this real market information can avoid losses, invest in the market with the ability to compete, and set the stage for high sales and quick profit. Below, one can see for this case study the total investment “Jaguar Brazil” is making to import its product and how much Tesla would be investing without consulting with NAX CORPORATION:
2019 JAGUAR I-PACE EV400 SE
Customs Start Amount: $31,500
Fees:
Import Fee = $11,025.00
Manufactured Fee = $10,631.25
Social Fee 1 = $825.30
Social Fee 2 = $3,959.55
State Tax = $7,901.06
State Tax 2 = $2,370.32
TOTAL PAID (Car + fees) = $68,212.48
2019 TESLA MODEL X
Customs Start Amount: $42,000
Fees:
Import Fee = $14,700.00
Manufactured Fee = $14,175.00
Social Fee 1 = $1,100.40
Social Fee 2 = $5,279.40
State Tax = $10,534.75
State Tax 2 = $3,160.42
TOTAL PAID (Car + fees) = $90,949.47
Jaguar’s starting price is lower than Tesla’s in this simulation and, therefore, Jaguar is paying less taxes. Tesla would be paying in taxes $12,237.49 more than Jaguar, making it impossible to sell at a competitive price.
Now hypothesize that Tesla hired NAX CORPORATION and had all information from steps 1 and 2 described above. To be competitive, Tesla reviewed its costs and considered feasible to sell Tesla Model X to Brazil at the same initial price Jaguar is using.
As Tesla has hired NAX CORPORATION, we would get Tesla Tax Benefits (Step 3). With this advantage and exporting to Brazil at the same price of Jaguar, Tesla would be able to enter a new journey having the adequate tools to become a leader in the Brazilian market as demonstrated below.
2019 JAGUAR I-PACE EV400 SE
Customs Start Amount: $31,500
Fees:
Import Fee = $11,025.00
Manufactured Fee = $10,631.25
Social Fee 1 = $825.30
Social Fee 2 = $3,959.55
State Tax = $7,901.06
State Tax 2 = $2,370.32
TOTAL PAID (Car + fees) = $68,212.48
2019 TESLA MODEL X
Customs Start Amount: $31,500.00
Fees:
Import Fee = $11,025.00
Manufactured Fee = $10,631.25
Social Fee 1 = $825.30
Social Fee 2 = $3,959.55
State Tax = $0.00
State Tax 2 = $0.00
TOTAL PAID (Car + fees) = $57,941.10
Without NAX CORPORATION, Tesla would have paid in taxes $12,237.49 more than Jaguar. However, with NAX’s support, Tesla would now be paying in taxes $10,271.38 lessthan Jaguar – a significant change that would make Tesla a leader in its segment at the Brazilian market. Steps 1, 2 and 3, are very important to have success in Brazil and with NAX CORPORATION, they will be readily available to the company with an excellent cost-benefit.
Step 4 will be developed case by case to allow American goods being released by Brazil’s Customs in 3 to 7 days. The average time without our support ranges anywhere from 7 to 20 days up to 3 or 4 months. An example comes from Mr. Barros’s experience in the second-hand office machines market. It is usual for importers to wait 15-30 days to get an Import License, which is a necessary authorization in the second-hand importing market. A company must receive this license from the Brazilian government before shipping its cargo. Meanwhile, the company is keeping machines in its stock, losing valuable time to close the selling cycle and being able to sell more products. Mr. Barros identified a solution for this specific bureaucratic problem: using norms hidden in the legislation, this license can be requested and received at the same day. With our deep knowledge of Brazilian’s bureaucracy, Step 4 will be customized for each client on an individual’s base to allow for improvement of its operation.
Would you like to know more about Brazil, our 4 Steps method, and other information? Contact me by Linkedln and we will be a pleasure for me to explain more about the opportunities for American companies in Brazil.
References:
KBB, Tesla, 2019: https://www.kbb.com/tesla/model-x/2019/75d/?vehicleid=441316&intent=buy-new
KBB, Jaguar, 2019: https://www.kbb.com/jaguar/i-pace/2019/ev400-se/?vehicleid=438501&intent=buy-new