This study analyses the Brazilian auto-industry based on Porter's diamond model, looking for the four competitive advantage factors and how the new automotive industrial policy (INOVAR-AUTO), recently launched in 2012, impacts on the local automobile industry. Results show that the Brazilian government's goal is in line with Porter's theoretical model, but it leads us to conclude that Brazil needs to devise, design and implement a focused and integrated industrial policy of research and development (R&D) in the country. The survey, conducted with Asian new comer car and auto-part manufacturers, shows they have quickly adapted to the new policy changes of INOVAR-AUTO without consolidating a real local R&D function. The absence of such a technological specialisation policy increases the chances for Brazil to become a centre of production and commercialisation of vehicles conceived externally and produced with increasingly less local content and local design with higher prices due to less competition Ver menos