Financial Education - Automotive companies and the importation of merchandise in foreign currency

Automotive companies are forced to import goods in foreign currency, which increases the cost of sales; secondly, consumers cannot purchase spare parts for their vehicles due to the high cost thereof; and thirdly, the inventory acquired by the company ends up paralyzed.

Without going into further details and controversies that would extend the subject beyond what is foreseen, it is clear that these inflationary facts have a negative influence on the development of the companies dedicated to this branch of activities.

To such effects, the spare parts companies dedicated to the purchase and sale of merchandise and automotive parts, particularly in border areas, where the currency that is circulating the most is the U.S. dollar, added to this the constant variations in increases of such currency with representation to the local currencies.

They are affected by the inflationary processes in some states, generating low profitability, reduction and paralyzation in their inventory, due to the high costs the companies cannot acquire the merchandise completely and this generates few sales since they cannot satisfy the demands requested by the clients, leaving as a result, a bad retribution of the income, affects their economy, and leads to win or lose.

On the other hand, it is important to publicize the cancellation of municipal taxes, in compliance by the companies, since the level that the regions must cancel may or may not affect the purchase and sale of merchandise and automotive parts.