1. April
2011
Automotive and Auto Parts Industry
Investment opportunities in Uruguay

2. 1. Why invest in the Uruguayan automotive industry?
Great experience in assembling vehicles and manufacturing auto parts
Uruguay has had –for years now− vehicle assembly plants and auto parts manufacturers,
both national and foreign. There are more than 40 companies today, several of which are
internationally certified in terms of quality. Exports in the automotive industry have grown
more than twice from 2005 to 2010.
Uruguay, a reliable country with a preferential access to the regional market
In Uruguay, foreign investors receive the same treatment as local investors. They are free to
transfer funds and to repatriate profits.
Uruguay is part of Mercosur, an enlarged market with more than 240
million inhabitants (and sales for more than 4.2 million vehicles in
2010), and almost 400 million inhabitants including other South
American countries with which Mercosur has economic
complementarity agreements, such as Bolivia, Chile, Colombia,
Ecuador, Peru and Venezuela.
In this regional environment, Uruguay has unlimited access to the
Argentinean and Brazilian markets for products in the automotive
industry, except for motorbikes and agricultural and road machinery.
The country has several origin regimes to export to Argentina and Brazil free of tariffs.
Pursuant to one of them, only 30% of minimum regional content is required for new models
during the first year. Under this regime, which has quantitative limitations, there is still an
important margin for companies which intend to export both to Argentina and Brazil.
Uruguay also has special agreements within the Mercosur. The last one, signed in 2008,
states that for Brazilian automotive products to enter our country free of tariffs, Brazil must
import auto parts and vehicles from Uruguay.
Also an agreement with Mexico was signed in 2004, which allows Uruguayan automotive
products to enter this country free of tariffs.
Uruguay has very attractive investment and exports promotion regimes
In 2007, an investment promotion regime was approved, which allows companies –under
certain conditions– to compute up to 100% of the invested amount as a credit for future
Corporate Income Tax payments.
There is also a beneficial regime for all exports, including:
VAT refund when purchasing materials
A Temporary Admission regime for imports of materials which are incorporated in
the exported goods, whereby they do not pay taxes (tariffs and others)
An export pre-financing system
2

3. Exporters of automotive products receive a 10% rebate of the exports' FOB value
through credit certificates issued by the government
Important tariff discount for imports of kits used in local assembly of vehicles
for the domestic market
Another benefit, for assembly companies only, is to be able to import supplies with a 2%
tariff as long as full assembly in the country is completed (CKD or Complete Knock Down).
Uruguay is attracting important foreign investments in this industry
Affinia, ArcelorMittal, Bader, Dana, Faurecia, Fischer, GKN, Takata and Yazaki are some
multinational companies supplying the regional and global market from industrial plants
located in Uruguay.
These foreign investments are made within a context in which the flow of foreign direct
investment to Uruguay has increased more than four times from 2001 to the present,
representing 4% of the GDP in 2009 and 2010.
Image source: www.autopartes.org.uy
3

4. 2. Interesting information for the industry: global sales, production
and exports in the region and in the country
The Uruguayan automotive industry has experienced a unique growth during the last years,
especially during 2010, when foreign investments have increased both in vehicle assembling
and in auto parts manufacturing. The industry projections are of growth in the next years
due to the expansion of recent investments and the establishment of new ones.
Graphs 2.1 and 2.2 show that both physical production –measured through the Physical
Volume Index– and employment in the industry have grown. At the end of 2010,
approximately 2,000 people were employed, that is, approximately 2% of total employment
in the manufacturing industry.
Graph 2.1 Evolution of the Physical Volume Graph 2.2 Evolution of the Employed Staff
Index, 2006=1001 Index, 2006=100
200 140
180 130
120
160
110
140
100
120 90
100 80
80 70
2006 2007 2008 2009 2010 2010/3 2010/4 2006 2007 2008 2009 2010 2010/3 2010/4
Industry Automotive Industry
Industry Automotive Industry
Source: INE, Annual Industrial Survey. Branch 3400.
Source: INE, Annual Industrial Survey. Branch 3400.
2.1 Global production and exports of vehicles
Global production of vehicles2 went from 58 million in 2000 to 62 million in 2009. Recently, a
fast production delocalization process from developed countries to emerging economies has
been verified. China’s new position is especially remarkable; it produced 2 million vehicles in
2000 and almost 14 million in 2009, being in the first global position that year, ahead of
Japan (7.9 million), United States (5.7 million) and Germany (5.2 million). See Graph 2.3.
1
INE information of Branch 3400 does not include leather upholstery for vehicles (registered in Branch 1912) or electrical
cables (registered in Branch 3100) or steel tubes (registered in Branch 2811).
2
2Source: International Organization of Motor Vehicle Manufacturers (OICA), www.oica.net. It includes automobiles, light
Source: International Organization of Motor Vehicle Manufacturers (OICA), www.oica.net. It includes automobiles, light
commercial cars, heavy vehicles (trucks) and buses.
4

5. Germany is still the leader in vehicle exports3, followed by Japan and further behind by USA,
Spain and Belgium. China is placed in an even lower position. See Graph 2.4.
Graph 2.3 Main vehicle manufacturing Graph 2.4 Main vehicle exporting countries,
countries, millions of units US$ billion, 2009
140
16 121
120
14
12 100
80 73
10
8 60
6 45 31
40
4 28 6
20
2
0
0
2000 2005 2009
China USA Japan Germany
Source: International Organization of Motor Vehicle Source: Uruguay XXI based on Customs information. It
Manufacturers (OICA), www.oica.net. It includes includes the harmonized customs codes 8701 to 8707
automobiles, light commercial cars, heavy vehicles (trucks) (passenger and load vehicles).
and buses.
2.2 Production of vehicles in Mercosur and in Uruguay
The annual production of vehicles in Mercosur was 4.5 million units in 2010, including
automobiles, light commercial cars, trucks and buses. In 2006, the production accounted for
3 million and it has not stopped growing since then, in spite of the recent world crisis. See
Chart 2.1 and Graph 2.5.
3
Source: Uruguay XXI based on Customs information. It includes the harmonized customs codes 8701 to 8707 (passenger
and load vehicles).
5

6. Chart 2.1 and Graph 2.5 Production of vehicles in Mercosur, 2006 to 2010, thousands of
units
Year Brazil Argentina Uruguay Total 5000 4,365
2006 2,612 432 0.9 3,045 4000 3,526 3,814 3,699
2007 2,980 545 0.7 3,526 3,045
3000
2008 3,216 597 1.1 3,814
2000
2009 3,183 513 2.5 3,699
2010 3,644 717 4.0 4,365 1000
0
Sources: for Brazil: Anfavea; for Argentina: Adefa; for
Paraguay: CIP; for Uruguay: Ascoma. It includes 2006 2007 2008 2009 2010
automobiles, light utility cars, trucks and buses. Paraguay,
2010, estimation with data to September. Brazil Argentina Mercosur
In Uruguay, the production of vehicles has taken up again a growing path in 2008 and 2009
after several years of stagnation. Vehicles are assembled in two previously existing plants
and in a newly built plant, using kits imported from the headquarters and integrating auto
parts of the national and regional industry.
Nordex plant in Colon, Montevideo, produces short series of trucks for the domestic
market and for export for Renault (under an agreement with Renault Trucks of the
Swedish group Volvo) and Aelous (under an agreement with the Chinese company
Dongfeng Motor) and pick-up trucks to be exported to Brazil, Bongo model (under an
agreement with Kia Motors from Korea).
Chery Automobile Co. Ltd. from China and Socma S.A. from Argentina produce Chery
vehicles in the old Oferol plant. Since 2009, Chery Tiggo vehicles, and more recently
Chery Face vehicles, have been manufactured to be exported to Brazil and Argentina.
Effa Motors. A new plant has been built on Route 1, Km 38, in the Department of San
José, with national capital, which opened in April 2010. Vehicles are assembled there,
with Chinese kits for the domestic market (15%) and to be exported to Brazil 85%.
They commercialize their own brand (Effa) and another Chinese brand (Lifan). The
initial investment in fixed assets was US$ 6.5 million.
2.3 Sales of vehicles in Mercosur and in Uruguay
Figures of vehicle sales in Mercosur are outstanding since they have almost doubled in four
years, going from 2.4 million units in 2006 to 4.2 million in 2010, with a stable growth even
during the recent world crisis (2008 and 2009). See Chart 2.2 and Graph 2.6.
6

7. Chart 2.2 and Graph 2.6 Sales of brand new vehicles in Mercosur, 2006 to 2010, thousands
of units
Year Brazil Argentina Paraguay Uruguay Total
5000 4,217
2006 1,920 461 9.4 16.3 2,407 3,465 3,717
4000 3,029
2007 2,444 565 12.9 20.8 3,043 2,371
3000
2008 2,824 612 22.3 28.8 3,487
2000
2009 3,154 487 13.5 28.4 3,683
1000
2010 3,453 698 20.6 45.7 4,217
0
2006 2007 2008 2009 2010
Sources: for Brazil: Anfavea; for Argentina: Adefa; for
Brazil Argentina Mercosur
Paraguay: CIP and for Uruguay: Ascoma. It includes
automobiles, light utility cars, trucks and buses. Paraguay,
year 2010, estimation with data to September.
Sales of vehicles per brand in Mercosur are within the same range that in 2008, led by
Volkswagen, Fiat and General Motora (62% of the total). See Graph 2.7.
Something similar happens in Uruguay, with the same three brands leading sales –General
Motors, Volkswagen and Fiat– even though in a different order and with less presence (49%
of the total). Also, the Chery vehicle stands out (recently started being assembled in the
country) with 5% of the market. See Graph 2.8.
Graph 2.7 Vehicle sales per brand in Graph 2.8 Vehicle sales per brand in
Mercosur, 2010 Uruguay, 2010
Others Others GM
Renault 15% Hyundai 23%
VW 27%
6% 3%
22%
Ford
Peugeot 4%
6% Toyota
4% VW
Fiat Renault 12%
Ford 21% 4%
11% Peugeot Fiat
GM 4% Chery Nissan 9%
19% 5% 5%
Sources: for Brazil: Anfavea; for Argentina: Adefa; for Source: ASCOMA.
Paraguay: CIP and for Uruguay: Ascoma.
7

8. 2.4 Auto parts exports in Uruguay
Uruguayan auto parts exports have Graph 2.9 Vehicles and auto parts exports,
been increasing from 2005 to 2010, 2005 to 2010, US$ million
going from US$ 140 million to US$
228 million during this period.
Vehicle exports grew in 2010 due to 350 282 331
the Chinese cars that are now being 300 246
250 215
assembled in the country. 190 228
200 155
209 218
Altogether, the automotive and 150 170
140 150
auto parts exports totaled US$ 331 100 103
50 64
million in 2010, and a greater 0
40 37 45
15
growth is expected in the years to
2005 2006 2007 2008 2009 2010
come. See Graph 2.7.
Vehicles Auto parts Total
Source: Uruguay XXI based on data from the National Customs
Office.
Auto parts exports are Graph 2.10 Auto parts exports per type of product, in
mainly concentrated on percentages, 2010
five products: 1) drive
shafts and axle shafts, 2) Brake parts, Others, 4%
leather upholstery, 3) steel 4% Axles and
Electrical
tubes for bodywork, 4) cables,
axle shafts,
electrical cables (harnesses) 35%
10%
and 5) brake bands, discs
and pads. See Graph 2.10. Steel tubes,
18%
Leather
upholstery,
29%
Source: Uruguay XXI based on data from the National Customs Office.
8

9. 3. Promotional legal regulations and regional and international trade
agreements favorable to produce and export from Uruguay
Uruguay has Trade Agreements and Investment Protection Agreements with several
countries and a set of legal regulations promoting investments and exports. All this generally
favors most of the economic sectors. See Annex.
The automotive industry has been subject to a long history of industrial policies in view of its
importance for the economy, taking into account the large number of parts that form a
vehicle. Therefore, several companies which provide auto parts may develop around an
assembling plant. Regional integration (Mercosur) in the productive environment gains a
great significance in this sector.
These industrial policies are applied to the foreign trade environment and to an appropriate
combination with the general promotion regulations (such as Temporary Admission and
others, see Annex), representing a powerful incentive for the establishment of assembling
plants and auto parts companies in Uruguay.
Trade agreements in Mercosur for the automotive industry4
The extra-zone tariffs for Mercosur are currently 20% for automobiles and light vehicles,
trucks and buses, 14% or 18% for auto parts and 14% for agricultural and road machinery in
general5.
In the Mercosur framework, Uruguay has entered into bilateral economic complementarity
agreements with Argentina and Brazil, from which arises the following (see Chart 1):
1) Uruguay may export car products to Argentina and Brazil at no cost and under no
quantitative restrictions provided it complies with a minimum Regional Content Index 6 of
60%7.
2) Regarding new models of vehicles or set or sub-sets of auto parts, approved in the
Progressive Integration Program (PIP) for each exporter, the same are also exempted from
fees and under no quantitative restrictions and a lower regional content is allowed:
40% at the beginning of the first year
50% at the beginning of the second year, and
60% at the beginning of the third year8
4
Source: ALADI (www.aladi.org/nsfaladi/textacdos.nsf/vaceweb) AAP.CE No. 2 Protocol 68 (with Brazil) and AAP.CE No. 57
and Additional Protocol (with Argentina).
5
March 2011.
6
ICR = [1 – (auto parts imports from outside the MERCOSUR-CIF/product sale price “exfactory”)] * 100. The minimum
Uruguayan content will be 20%.
7
ACE No. 2, Articles 5 a) and 10.
8
ACE No. 2, Articles 5 a) and 14.
9

10. 3) Uruguay may export to Argentina and Brazil at no cost with a preferential origin regime:
a) Car products (vehicles, sets and sub-sets of auto parts), with a minimum Regional Content
Index of 50%9.
b) For new models of vehicles or sets or sub-sets of auto parts, included in the Progressive
Integration Program approved for each exporter, the minimum Regional Content Index is:
30% for the first year of the project
35% for the second year
40% for the third year
45% for the fourth year, and
50% from the fifth year onwards10.
In both cases there are quantitative restrictions (quotas):
vehicles and commercial light cars: up to 20,000 annual units to each country;
trucks and tractor trucks: up to 800 units to Argentina and up to 2,500 to Brazil;
armored cars: up to 500 and 1,200 units respectively;
auto parts sub-sets: up to US$ 60 million to Argentina and up to US$ 100 million to
Brazil.
4) For armored vehicles manufactured in Uruguay, the tariff preference of 100% (that is, no
tariff) is maintained, but there are certain quantitative restrictions. Moreover, the minimum
Regional Content Index may be 50%11.
Chart 3.1 Uruguay, origin regime of car products for exports to Argentina and Brazil
Existing models New models Armored vehicles
1st year: 40%
With no quantitative
60% 2nd year: 50% 60%
restrictions
3rd year: 60%
1st year: 30%
2nd year: 35%
With quantitative
50% 3rd year: 40% 50%
restrictions
4th year: 45%
>= 5th year: 50%
5) In 2008, Uruguay and Brazil agreed to reduce Uruguay’s automotive and auto parts
commercial deficit with respect to Brazil through new trade parameters, which are variable
in proportion to the Uruguayan exports to Brazil, verified during the previous year (applies
9
ACE No. 2, Articles 5 b) and 11.
10
ACE No. 2, Articles 5 b) and 15.
11
ACE No. 2, Articles 5 c) and 11.
10

11. to light passenger vehicles, auto parts sets and sub-sets and utility cars). These new
negotiated mechanisms are expected to enable a productive integration in the industry at a
bilateral level with Brazil or at a regional level.
Trade agreement Mercosur-Mexico
In 2002, a specific agreement was signed with Mexico for the automotive industry, which
allows exporting auto parts and vehicles to this country with no tariffs, under origin regimes
that are quite favorable for Uruguay, especially when it comes to new products (50% in
general and 30% for the first year of a new product, Annex II of ACE No. 55)12.
Benefit for vehicle assembling companies13
Automotive terminals may import vehicle kits with a preferential fee of 2% provided that
they comply with a complete assembling process in the country (from CKD, a collection of
pieces that are completely disassembled) and they destine their production to the domestic
market.
Export refund
There is a 10% refund over the value of vehicle and auto parts exports, through credit
certificates issued by the Government, which may be used for paying customs taxes as well
as taxes collected by the DGI (Tax Administration Office) or the BPS (Social Security System).
These credit certificates may also be assigned to third parties. The refund cannot be applied
together with the “Refund of other taxes”, applicable to goods exports14.
Prefinancing of exports
A preferential regime has been established for the automotive sector, currently in force until
June 30, 201115.
Excise Tax discount to sales of brand-new electrical vehicles, hybrid vehicles and gasoline
vehicles of lower displacement engine in the internal market
Decree 411/010 of December 30, 2010 established the following Excise Tax (IMESI) rates for
sales of brand new vehicles in the internal market:
Electrical vehicles 5%, hybrid vehicles 3%
Gasoline vehicles, 20% for those up to 1,000 cc, 25% for those with more than 1,000
and up to 1,500 cc, 30% for those with more than 1,500 cc and up to 2,000 cc, 35%
for those with more than 2,000 cc and up to 3,000 cc, and 40% for those with more
than 3,000 cc.
12
ACE No. 55 of September 27, 2002, Additional Protocol of July 12, 2004 and a Free Trade Agreement between Mexico
and Uruguay of November 15, 2003.
13
Decree 340/996 of August 28, 1996.
14
See Annex, Government incentives to exports.
15
BCU’s communication 2009/063 of April 24, 2009.
11

12. 4. Recent investments in the industry
Foreign Direct Investment has considerably increased in Uruguay in the last years. See Graph
4.1. If classified by destination sector, approximately half of the investments are made in
companies and banks and the other half are made in the real estate sector and in lands16. In
the 2000’s, the countries that have invested the most were Spain, Argentina, USA, Brazil and
England17.
Graph 4.1 Foreign Direct Investment in Uruguay, US$ million
2.000 1,809
1.800
1,627
1,494
1.600 1,330 1,258
1.400
1.200
847
1.000
800 1,104
600 332 779 798
400 616
200
0 194
2004 2005 2006 2007 2008 2009 2010
Total FDI FDI in companies and banks
Source: Central Bank of Uruguay
Before the integration of Mercosur, several international first-class companies such as
General Motors, Ford, Fiat, etc. had vehicle assembling plants in Uruguay. Currently, Asian
companies have begun to produce vehicles in the country, thus gaining internationalization
experience. Around these companies and by seizing the exports opportunities Uruguay has
to offer, a foreign flow of investment is generated to the auto parts sub-sector, which had
been exporting products such as leather car seats for world-class vehicles, using excellent
national raw materials and drive shafts and axle shafts, destined to global and regional auto
parts terminals.
4.1 Assembling plants
Asian vehicles manufacturers are carrying out dynamic investment processes. Some of them
use old national plants, entering into agreements with their owners or acquiring them, while
others build new assembling plants.
16
In 2008, FDI percentages were: 37% in companies, 6% in banks, 32% in the real estate sector and 23% in lands.
17
In 2008, FDI percentages per country were: Argentina 30%, Spain 13%, Brazil 10%, USA 8%, England 5% and others 34%.
12

13. Chery-Socma
Chery company, which produced more than
800,000 automobiles in China during 2010,
together with Socma S.A. from Argentina,
which began producing Chery vehicles in the
Oferol plant in 2009, nowadays directly
manages the assembling plan, exporting the
Tiggo and Face models to Brazil (52%) and
Argentina (47%), data from the year 2010. It
expects to increase the production to 20,000
units a year and later on to 40,00018.
Image source: www.ultimasnoticias.com.uy
Chongqing-Effa Motors
The Chinese company Chongqing Lifan,
which manufactured more than 100,000
vehicles in 2009, has entered into a license
and representation agreement for
Mercosur with the plant Effa Motors19 for
the production and sale of Lifan 320 and
620 models, as from the year 2010. The
investment at the opening (April 2010)
was of US$ 6.5 million, but it would reach
US$ 15 million, allowing the production of
30,000 cars per year, employing 450
workers. Image source: www.effamotors.com
The destination of the production will be 15% for the internal market and 85% for export,
mainly to Brazil (90% of the exported products in 2010).
Kia Motors-Nordex
The Korean company Kia Motors entered
into an agreement with the assembling
plant Nordex, located in Colón,
Department of Montevideo, to produce
light trucks Kia Bongo 2500 as from 2010.
95% of the production will be exported to
Brazil and 5% will be used in the internal
Uruguayan market. The capacity of the
plant is of 12,000 vehicles a year and it
Image source: www.genteynegocios.elpais.com.uy
18
Information provided by Chery-Socma’s management, February 25, 2011.
19 2
Effa Motors’ plant is located on Route 1, in the Department of San José with 33,000 m of premises.
13

14. demanded an initial investment of US$ 25 million. The first export was carried out in
December 2010.
Dongfeng Motor-Nordex
Dongfeng Motor (DFM), a Chinese manufacturer
of over 600,000 vehicles in 2009, began producing
medium-sized Aeolus trucks in 2005 for the
internal market in the Nordex plant and in 2010 it
began exporting to Argentina.
Image source: www.autoanuario.com
Renault Trucks-Nordex
Renault Trucks from Volvo uses the Nordex plant
(Santa Rosa Automotores) to produce heavy trucks
such as Premium 440 DXi for the domestic market
and to be exported to the region.
Image source: www.autoanuario.com
4.2 Auto parts
In the auto parts sector, there are national companies mainly supplying the domestic
replacement market and foreign companies which are focused on export.
Some of these have been operating for many years in the country (Bader, Dana, GKN);
others have recently made investments both in new industrial plants (Faurecia, Fischer,
Takata, Yazaki) and in the acquisition of existing plants (ArcelorMittal, Affinia, Marfrig).
Bader
Bader (Germany) is an industry which
supplies fine leather upholstery for vehicles.
Currently, Bader employs 4,200 workers in
seven plants around the world, two of which
are established in America (Mexico and
Uruguay). Bader’s factory in Uruguay is
located at the Department of San José. It
began processing leather for vehicle
upholstery in 1999, achieving its expansion
Image source: www.bader-leather.de
in 2001, 2002 and 2007. As of 2010, its
14

15. main exports were bound for Germany (37%), South Africa (29%) and Mexico (28%).
Dana-Talesol
Dana Holding Corporation, a U.S.-based company engaged in the design, engineering and
production of spare parts and systems with added value for vehicle makers, employs 35,000
workers and has operations in 26 countries.
Image source: www.dana.com
Talesol Ejes Plant located at Montevideo, Uruguay, manufactures full Spicer light drive shafts
for pickups and 4x4, exporting original equipment for automotive industries in South
America, USA and Mexico. It began operations in 1996 and has supplied light drive shafts for
Mercedes Benz, General Motors, Chrysler and it has been manufacturing rear drive shafts
for Ford Ranger from 2001. It holds quality and environment protection certificates, ISO, QS
9000 and Ford Q1. It exports to Argentina (2010).
GKN Driveline
GKN has factories in more than 30 countries with more than 38,000 employees. Its main
factory is located in the United Kingdom and mainly operates in the automotive and
aeronautic sectors.
In Uruguay, GKN was established in 1981 and has an industrial plant that produces axle
shafts for automotive terminals. In 2010, its main exports were bound for Argentina (56%)
and Brazil (38%) and, to a lesser extent, to USA (5%).
Image source: www.gkndriveline.com
15

16. Affinia-Fanacif Uruguay
Affinia Group Inc. is a USA-based company with a material supply of spare parts for cars and
heavy vehicles. It performs manufacturing and distribution operations in 11 countries and
sales in more than 70 countries.
In Uruguay, Affinia owns Fanacif plant, located in Montevideo. It employs 165 workers and
its main activity is the manufacture of brake pads, brake bands, brake discs and brake bells,
selling in the domestic market and exporting to Argentina (48%), Brazil (28%), USA (12%) and
other countries (2010).
Image source: www.affiniagroup.com
ArcelorMittal Montevideo
ArcelorMittal is a company that offers a vast range of steel products. It has industrial
presence in more than 20 countries and is listed at the New York, Amsterdam and Paris stock
exchanges as well as at other European countries' stock exchanges. One of its areas supplies
automotive terminals.
In Uruguay, Arcelor Mittal Montevideo acquired the existing company, Cinter S.A. It
produces stainless steel, aluminum-coated and carbon cold and hot-rolled steel pipes, with
exports to Brazil (70%), Argentina (26%) and other American countries (2010).
Fischer
Fischer Group of Germany established in Uruguay its fourth branch in America in 2009, after
Canada, USA and Mexico. The company employs 1,500 workers in 8 countries. Its main
activity is the manufacturing of steel pipes for exhausting systems in the automotive
industry. From Uruguay it will supply, through its factory located in Montevideo, Peugeot,
Volkswagen, Chevrolet, Fiat, Renault, Honda and Citroën plants within the Mercosur area.
Image source: www.fischer-group.com
16

17. Marfrig-Zenda
Marfrig Group is a Brazilian food company specialized in the meat sector, with presence in
22 countries and it employs 90,000 workers. In Uruguay, after acquiring several cold-storage
plants, it acquired Zenda in 2009, a Uruguayan leather-processing company for car, airplane
and furniture upholstering.
Zenda also has industrial plants in Germany, Argentina, Mexico, South Africa and commercial
offices in Chile, China and USA. Zenda’s upholstery is used as original equipment in luxury
vehicles such as Audi, BMW, Peugeot, Toyota and others. In 2010, it exported to Germany
(69%), Argentina (18%), Mexico (10%) and other countries.
Ruedas del Uruguay
The company Ruedas del Uruguay (with Argentinean capital) is currently fitting out a space
at the Industrial Park of Juan Lacaze (Colonia) where it is installing its factory oriented to the
production of truck rims bound for export. Operations are expected to begin in 2011.
Takata
Takata is a Japanese company that owns 46 plans in 17 countries and employs 31,000
workers. Its main activity is the production of airbags, safety belts and child retention
systems. In 2010, it purchased a plot of land in Road 1, San José, Uruguay, to build a factory
expected to employ 500 workers in three years and to export its airbag production to Brazil.
The investment will amount to US$ 10 million and the opening is expected for November,
2011. The purchase was motivated by labor force conditions, availability of water, energy
and easy access, among other aspects, as well as by the tax relieves offered.
Trailers del Uruguay
In this case, the company installed at an Industrial Park (Juan Lacaze) will produce
transportation trailers. It is made up of Argentinean capital and production is bound for
export. Production is expected to begin in 2011.
Yazaki
The Japanese company Yazaki owns 87 industrial plants around the world. Its main activity is
the production of auto parts (harnesses of electrical cables), cables in general and other
items. In Uruguay, Yazaki was installed in Colonia in 2006 upon the assignment of a state
area near the Port, employing approximately 400 workers.
In 2010, Yazaki opened its second factory in Uruguay at “Parque Tecnológico Canario”
(Technology Park) in Canelones, with support from the Municipality, the Ministry of
Transport and Public Works (MTOP), the Ministry of Industry, Energy and Mining (MIEM)
and the National Corporation for Development (CND). It also produces electrical cables
harnesses and electronic items for the automotive industry. Its production was exported in
2010 to Argentina (93%) and Brazil (7%). Nearly 1,000 workers are employed by this
industrial plant.
17

18. Lucca Design
The company Lucca Design belongs to the
Uruguayan group Ayax, created 65 years ago.
Its main activity is the manufacturing of
leather upholstery for vehicles. It began
operations in 2004 and in 2005 it started
exporting to Argentina as supplier of Toyota
SUV Fortuner. In 2008 it started supplying
another Toyota model in Argentina: Hilux
vans. In 2011, Lucca Design incorporated
leather upholstery for SUV Fortuner with Side
Air-bag, using leading-edge technology, since
it must open its seam in case of accident to Image source: Lucca Design
enable the airbag inflation.20
20
Source: El País newspaper, El Empresario supplement, published on November 19, 2010. Picture provided by the
company.
18

19. 5. Main sector-related institutions and events
Institutions
Ministry of Industry, Energy and Mining (MIEM)
Tel.: +598 2902 0231
www.miem.gub.uy
National Industry Administration (DNI)
Tel.: +598 2916 2411
www.dni.gub.uy
Uruguayan Chamber of Industry (CIU)
Tel.: +598 2604 0464
www.ciu.com.uy
Chamber of Auto Parts (within CIU)
Tel.: +598 2604 0464 ext. 210
www.autopartes.org.uy
compaut@ciu.com.uy
Chamber of Uruguayan Automotive Industries (CIAU) (within CIU)
Tel.: +598 2903 0008
Association of Car Brand Concessionaires (ASCOMA)
Tel.: +598 2408 1545
www.ascoma.com.uy
Events
Events in the country in which the automotive sector takes part
Expoactiva Nacional, agro-industrial annual fair (March 2011), organized by the Rural
Association of Soriano. www.expoactiva.com.uy
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20. ANNEXES
National and foreign investment promotion regulations
Foreign investors enjoy the same benefits as national investors
and do not require prior authorization to get installed in the
country.
Law 16,906 of January 7, 1998 declares the promotion and
protection of national and foreign investments of national
interest. Decree 455/007 updated the regulations of this law. By
virtue of this decree and for any investment projects submitted
and promoted by the Executive Branch, 51% and 100% of the invested amount may be
computed as part of the Corporate Income Tax (IRAE), depending on the type of project.
IRAE regular rate is 25%.
Personal property included in fixed assets and civil works are exempt from Wealth Tax. VAT
included in the purchase of materials and services for civil works can be recovered.
Moreover, the import of personal property included in fixed assets which is not competitive
in the national industry is exempt from import taxes or duties, as declared by said law.
Trade agreements
Uruguay has been part of the World Trade Organization (WTO) since its creation in 1995 and
is part of the Latin American Integration Association (ALADI, 1980) along with ten South
American countries, Cuba and Mexico.
In the framework of ALADI, it has been part of the Southern
Common Market –MERCOSUR– with Argentina, Brazil and Paraguay.
MERCOSUR became a customs union in 1995 with the free
movement of goods, removal of tariffs and non-customs restrictions
between the parties and a Common External Tariff to other
countries. Venezuela is currently in the process of entering
Mercosur.
Moreover, in the framework of ALADI, Mercosur has executed free-
trade agreements with other South American countries: Chile (1996),
Bolivia (1996), Colombia, Ecuador and Venezuela (2004) and Peru
(2005) and, separately, an agreement with Israel (2007), all of which
are oriented to create Free Trade Zones with duty-relief schemes
which will be completed no later than 2014/2018, depending on the country.
Uruguay has also executed with Mexico a bilateral free-trade agreement (2003) which
enables the free movement of goods and services between both countries (no tariff), with
certain exceptions, to be completed in 2014.
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21. Investment protection agreements
Uruguay has executed investment performance, protection and promotion agreements with
26 countries, including but not limited to Spain, United States of America, Finland, France
and United Kingdom.
Government’s incentives to exports
1. VAT refund when purchasing materials21
VAT paid in purchases is generally recovered by discounting VAT invoiced in sales, paying the
State just the difference thereof. Since in exports said tax is not invoiced, the reimbursement
of VAT included in the purchase of materials is authorized directly upon the company’s
request. The Tax Administration Office (DGI) issues credit certificates which may be used in
the payment of other taxes.
2. Refund of other taxes22
The State reimburses other internal taxes which make up the cost of an exported product
through an alleged percentage of the FOB value determined by the Executive Branch
(currently 4%).
3. Temporary Admission23
The import of materials and spare parts, packages and matrixes which will be included into
the production of exported goods is exempt from customs duties and Value Added Tax. The
only requirement is to make the export within a term of 18 months.
4. Financing of exports24
The Central Bank of Uruguay (BCU) has a pre-financing of exports system. In case exports
receive pre or post bank financing, 30% (or 10% in some cases) thereof may be deposited
with BCU, which will accrue interests on the overall financing instead of accruing interests on
the amount thus deposited.
5. Free Trade Zones25
Uruguay has ten Duty-Free Zones or areas which operate under
special customs regime which perform manufacturing activities
and provide services to other countries where no customs duties
are applied to incoming/outgoing goods and services. There is
21
Refer to Consolidated Text (Texto Ordenado) 1996, Title 10 (VAT), Article 9.
22
Decree 230/007 of June 29, 2007 with new taxes according to Decree 389/2009 of August 20, 2009, as amended.
23
Law 18,184 of October 27, 2007 as regulated by Decree 505/2009 of November 3, 2009.
24
See http://www.bcu.gub.uy/Politica-Economica-y-Mercados/Paginas/Lista-de-Informes.aspx?SID=34&SSID=21 Libro III,
Financiamiento de exportaciones
25
Law No. 15,921 of December 17, 1987. Law No. 15,921 (Article 2), Decree No. 71/001 (Article 3) and Decree No. 84/006
(Article 1).
21

22. large exemption from national taxes such as Corporate Income Tax (IRAE) and others –with
the sole exception of social security contributions for national personnel.
The sole requirement which must be met is contracting at least 75% of Uruguayan citizens
within the overall payroll, although this percentage may be reduced prior authorization of
the Executive Branch.
6. Free port, free airport and port warehouses26
Montevideo and other national ports, as well as the International
Airport, operate under a free movement of goods policy. Therefore,
goods are exempt from duties and surcharges applicable to imports
for handling, fractioning and repackaging activities, among others
(not involving manufacturing activities).
26
Ports Law No. 16,246 of April 8, 1992 and regulatory Decree No. 412/992 and Law No. 17,555 of September 18, 2002 on
Airports.
22

23. Uruguay in short (2010)27
Official name Oriental Republic of Uruguay
Geographical location South America, bordered by Argentina and Brazil
Capital city Montevideo
2
176,215 km . 95% of its territory is productive land fit for farming
Area
exploitation
Population (2010) 3.3 million
Population growth (2010) 0,35% (annual)
GDP per capita (2010) US$ 11,996
Currency Uruguayan peso ($)
Literacy index 98%
Life expectancy 77 years
Form of state governance Democratic republic with presidential system
Political division 19 departments
Time zone GMT - 03:00
Official language Spanish
Main economic indicators 2005-2010
Indicators 2005 2006 2007 2008 2009 2010
GDP (growth % per year) 7.5% 4.3% 7.5% 8.6% 2.6% 8.5%
GDP (US$ million) 17,398 19,844 23,928 31,177 31,320 40,265
Population (million) 3.31 3.31 3.32 3.33 3.34 3.36
GDP per capita (US$) 5,263 5,987 7,199 9,351 9,363 11,996
Unemployment rate (annual average, % EAP) 12.20% 11.41% 9.64% 7.89% 7.66% 7.13%
Exchange Rate (UYU/US$, annual average) 24.4 24.0 23.4 20.9 22.6 20.06
Exchange Rate (annual average variation) -1.66% -2.51% -10.6% 7.74% -11.1%
Consumer Prices (% annual variation) 4.90% 6.38% 8.50% 9.19% 5.90% 6.93%
Exports (US$ million), goods and services 5,085 5,787 6,933 9,372 8,510 10,555
Imports (US$ million), goods and services 4,693 5,877 6,775 10,265 7,794 9,743
Commercial Surplus/Deficit (US$ million) 393 -90 158 -892 716 811
Commercial Surplus/Deficit (% of GDP) 2.3% -0.5% 0.7% -2.9% 2.3% 2.0%
Global Tax Result (% of GDP) -0.4% -0.5% 0.0% -1.5% -1.7% -1.1%
Capital gross formation (% of GDP) 16.5% 18.6% 19.0% 20.4% 18.8% 18.8%
Gross Debt (% of GDP) 80.2% 69.1% 68.2% 53.0% 69.9% 56.6%
Direct Foreign Investment (US$ million) 847.4 1,494 1,330 1,809 1,258 1,627
Direct Foreign Investment (% of GDP) 4.9% 7.5% 5.5% 5.8% 4.0% 4.0%
27
Source: Data regarding GDP were taken from the IMF; data regarding foreign trade, foreign direct investment (FDI),
exchange rates, International Reserves and External Debt were provided by BCU; population growth, literacy,
unemployment and inflation indexes were provided by the National Statistics Institute.
23

24. Investor Services
About us
Uruguay XXI is the Uruguayan investment and export promotion agency. Uruguay XXI
provides free support to foreign investors, both to those who are in the process of assessing
where to make their investments and those who have been operating in Uruguay for a long
time.
Our Investor Services
Uruguay XXI is the first point of contact for foreign investors. Our services include, but are
not limited to, the following:
Macro and sectorial information. Uruguay XXI regularly prepares researches on
Uruguay and several sectors of economy.
Tailor-made information. We prepare personalized information to answer your
specific questions, such as macroeconomic data, labor market, taxes and legal
aspects, investment-promotion programs, localization and costs.
Contact with main players. We generate contacts with governmental entities,
industrial players, financial institutions, research and development centers and
potential partners, amongst others.
Promotion. We provide investment opportunities in strategic events, missions and
business networking meetings.
Arrangement of visits to the country by foreign investors, including the setting of
meeting agendas with, for instance, public authorities, suppliers, potential partners
and chambers of commerce.
Publication of investment opportunities. We periodically publish in our page
information on investment projects provided by state institutions and companies.
invest@uruguayxxi.gub.uy
www.uruguayxxi.gub.uy
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