Diffusion of new automotive technologies for improving energy efficiency in Brazil’s light vehicle fleet

Historically, Brazil has promoted the development and sales of light duty vehicles running on ethanol (firstly, ethanol-dedicated cars, and recently flexfuel cars). In the 1990s, the country also favored the sales of compact cars to middle and low-income classes. However, in the last years, the profile of vehicles sold in Brazil has converged towards larger and less-efficient vehicles. In 2008, Brazil launched the vehicle labeling program. Based on the outcomes of the historical programs oriented towards the development of automotive innovations, and on a survey conducted with the country’s main auto makers, this article evaluates whether the vehicle labeling program will both improve the energy efficiency of light vehicles, and introduce new technologies. Our results indicate that, despite its virtuous intentions, the program will not control the tendency of rising fuel consumption of passenger cars sold in Brazil. Therefore, other policies are needed to boost innovations in Brazil’s automotive industry.