Kia Brazil’s future uncertain as tax dispute clouds production plans

Leaving his technology center in Salto, in São Paulo state, businessman José Luiz Gandini spends some time looking over the neighboring property. He owns the large tract of land, which reminds him of other sizable plots that once inspired him to build a Kia car plant. That plan never materialized because of a tax debt that has nothing to do with him. That liability was left behind by Asia Motors, later acquired by Kia. Now Gandini also faces the risk of losing Kia’s representation in Brazil after 34 years. The South Korean automaker could potentially build its own plant in the country if the Brazilian government waives the debt. So far, neither Kia’s headquarters nor Brazil’s Finance Ministry has confirmed any agreement along those lines. While he waits, Gandini is making other plans.

The land Gandini is now eyeing is likely to be used to expand the technology center, an emissions-testing laboratory that began operating in late 2019 and can no longer keep up with growing demand. The facility conducts emissions tests required to certify vehicles from various automakers for sale in Brazil. Along with the rapid expansion of Chinese automakers, which are rushing to certify new models, increasingly stringent emissions rules are requiring more rigorous testing. Since March 2025, the center has operated around the clock.

“I think I’m going to need the space on that property,” Gandini says, stopping once again to consider a solution. Expanding the facility will not be easy. A street runs between the center and the property. Extreme care is required when handling vehicles kept under strict secrecy because they have not yet been launched on the market.

Recognized by Cetesb, São Paulo state’s environmental agency, and accredited by Inmetro, Brazil’s national metrology and quality institute, the laboratory conducts tests for tailpipe emissions, fuel consumption, and evaporative emissions in combustion-powered vehicles, as well as energy-efficiency tests for electric cars.

The technology center is now set to receive R$57 million in investment, doubling its capacity and allowing it to begin testing motorcycles. With the expansion, the facility is expected to increase the number of tests from 1,200 in 2025 to 2,400.

During a tour of the laboratory, Gandini walks past rows of covered cars. They are closely guarded secrets belonging to various automakers. Some models already sold in Brazil are being prepared for new versions. One Chinese brand, for example, is testing the use of ethanol in hybrid vehicles at the facility.

Had Kia’s headquarters authorized him to build the plant he envisioned in the mid-1990s, Gandini would have avoided a situation that has long frustrated him: having to contend with Brazil’s shifting tax rules, including frequent changes in import tariffs and, at times, additional penalties for automakers that do not manufacture locally. “I wanted to produce here so I could get away from tax uncertainty and be competitive,” he says.

At the same time, Gandini became entangled in a debt that is not his. In the 1990s, Asia Motors’ Brazilian operation—the company was later acquired globally by Kia—benefited from tax incentives to import vehicles in exchange for a promise to build a factory that was never built. The arrangement generated a multibillion-real tax liability and a court case that remains under seal. Unofficial estimates put the debt at as much as R$6 billion.

After Asia Motors and Asia Motors Brasil were dissolved, the Brazilian government determined that it could seek payment of the debt from Kia. Fearing that a future investment could be seized because of the liability, Kia Corporation canceled a technology-licensing agreement it had been negotiating with the Gandini group to manufacture vehicles in Brazil. Kia is part of the Hyundai group, which has operated a plant in Piracicaba, São Paulo state, since 2012.

Gandini has previously suggested to the press that Kia International’s headquarters and the Brazilian government were negotiating a debt waiver in exchange for a plant in Piracicaba, next to Hyundai’s facility. The project would be led by Kia’s headquarters. If successful, it would end the Brazilian importer’s exclusive representation of the brand.

There is no official information confirming such a deal, however. Gandini is now reluctant to discuss the matter. Kia Corporation said that “to date, no final decision has been made regarding possible commercial activities in Brazil.”

“Kia Corporation also clarifies that the debt does not belong to the company, but to Asia Motors Brasil, a company that was never owned by Kia,” it said. It added: “This matter was recognized by the International Court of Arbitration, an organ of the International Chamber of Commerce (ICC), and confirmed by the Superior Court of Justice (STJ).”

Asia Motors Brasil was indeed owned by Brazilian investors. But the suspected involvement of Korean shareholders led the Brazilian government to seek payment from Kia, the former global owner of Asia Motors.

Kia further said that, in its view, it “has no responsibility whatsoever for the debt in question, which remains under judicial review and has not yet been definitively resolved.” “The company is not aware of any changes affecting operations involving Kia vehicles imported and sold in Brazil,” it added in a statement sent to Valor.

On the Brazilian side, the Finance Ministry’s communications office said it was unaware of any negotiations of this kind. It also declined to confirm the amount of the debt. Hyundai Brazil, through its communications office, said it does not comment on Kia “as they are separate companies.”

Despite the lack of official information, the possibility remains in the air. If Kia manages to have the debt waived in exchange for a factory and jobs, it will face stiff competition from Chinese brands, which already account for more than 20% of light-vehicle sales in Brazil and have a strong lead in electrified vehicles. Hyundai, meanwhile, has an agreement with General Motors to jointly develop new platforms for future generations of vehicles produced in Brazil.

Whatever the outcome, Gandini has another connection to Kia outside Brazil. After being denied permission to build a factory in Brazil, the businessman decided to manufacture vehicles in Uruguay with the approval of Kia’s headquarters. Ten years ago, he struck a deal with local manufacturer Nordex, which operates a plant near Montevideo. “The factory was practically idle, but it resumed operations after we invested in our production line,” Gandini says. Nordex now also manufactures vehicles for other automakers, including Stellantis.

Nordex produces 900 Kia Bongo light trucks a month in Uruguay, most of them destined for Brazil. The Tasman pickup, currently imported from South Korea, will likely also be produced there.

The Tasman, priced at R$249,990, marked Kia Brazil’s entry into the pickup-truck segment when it was launched Tuesday (18). “We were missing a pickup. Now, finally, we have one,” Gandini said.

The Gandini group, owned by a traditional family from Itu, a city near Salto, in São Paulo state, does not disclose its revenue. According to Gandini, its businesses rank, by importance, as follows: Kia Brazil first, followed by Kia Uruguay, the technology center and, finally, a real estate company.

The future of Kia Brazil remains uncertain. The technology center, by contrast, is operating at full capacity. According to Gabriel Loureiro, the laboratory’s director, its schedule is booked through 2027. New requests cannot be accommodated for another year.