Brazilian President Signals Openness to Business at New Car Factory Opening
Brazil’s socialist president, Luis Inacio Lula da Silva, recently expressed that the country is “open to business” during a ceremony marking the inauguration of a Chinese car factory in Sao Paulo.
“Trust in the Brazilian government. Anyone who wants to leave, or anyone who wants to come, is welcomed with open arms,” Lula stated.
It seems Lula may have been alluding to car manufacturers like Mercedes, which have scaled back their operations in Brazil over recent years. Mercedes closed a small factory in Sao Paulo in 2020, a decision linked to declining demand as a result of the pandemic.
Similarly, Ford exited the Brazilian market, closing three factories in northeastern Brazil the following year—a move that had a considerable negative impact on the local economy. Ford reportedly lost nearly $12 billion attempting to sell vehicles in Brazil.
The Lula administration promotes the idea of Chinese automakers entering Brazil’s growing electric vehicle market. However, Ford’s experience involved a financial collapse tied to an uncompetitive subcompact model, rather than the SUVs that Brazilian consumers seemed to prefer.
Other international auto manufacturers have voiced concerns over Brazil’s cumbersome bureaucracy, costly compliance, and high tariffs meant to shield local businesses from foreign competition. Companies such as Volkswagen, General Motors, and Toyota have collectively reported around $1 billion in losses, even during times when heavy subsidies from the government were available to attract operations.
Lula’s “open for business” message appears to be his attempt to counter these grievances while also showing some irritation toward companies that chose to leave Brazil’s challenging markets.
Chinese manufacturer BYD, now the leading global producer of electric vehicles, has taken a troubling approach in the Brazilian market. Reports emerged about conditions at their massive factory in Kamakari, where hundreds of Chinese workers, left behind by Ford in 2021, have allegedly been subjected to labor conditions likened to slavery. Employees reportedly had to forfeit up to 70% of their wages for compliance, facing harsh penalties if they attempted to quit.
Local skilled workers expressed frustration, stating that many promised jobs from the influx of Chinese investment went instead to workers in dire conditions. Authorities acted in April 2025, leading to legal action against BYD in May for these troubling labor practices. Meanwhile, another Chinese EV producer, GWM, also known as Great Wall Motor Co., has taken over a former Mercedes plant with expectations to manufacture up to 50,000 vehicles annually by 2028.
GWM recently announced its plans for the first factory, aiming to produce various models, including SUVs and a pickup truck, while searching for locations for a second factory in Brazil. Despite higher price points, GWM anticipates selling around 300,000 units in Brazil.
Lula voiced concerns over tariffs imposed during Donald Trump’s presidency, suggesting he might lean on China and the BRICS economy to mitigate what he deemed “unnecessary turbulence.”
Last week, the Lula administration expanded assistance programs for Brazilian companies affected by these tariffs, introducing special credit options for exporters and subsidies for goods left unsold. However, Lula refrained from announcing retaliatory measures against the U.S., instead declaring that “our sovereignty is out of hand” without overtly engaging with Trump on these negotiations.
