Volkswagen plans to invest up to 2.3 billion euros in Brazil

Article by Christian Andrei, on August 25, 2010

Brazil will be receiving an investment of up to 2.3 billion euros ($3.5 billion) from Volkswagen AG from 2009 through 2014. VW aims to add products and boost manufacturing capacity.

VW wants to take over Toyota's place as the top automaker in the world by 2018 and to do that, VW is aiming to take advantage of the growth in Brazil VW's third-largest market after China and Germany.

VW currently ranks third in the world while GM takes second place. In a statement, Thomas Schmall, CEO VW Brazilian operations, said that the carmaker aims to win market share this year and to be able to sell 1 million vehicles per year in Brazil by 2014.

The investment plans come as VW predicts that auto sales in Brazil will reach as high as 4 million units a year in 2014, a 33 percent increase from the current 3 million a year.

At a press conference in Sao Paulo, Schmall said that the company doesn´t only want to lead in the Brazil market, it also wants to focus on growing in a sustainable way.

Without these emerging markets, the auto industry would have been utterly bleak. The economic recession has forced carmakers to cut production. Meanwhile, the various governments in Europe and the US have released financial aid and scrappage schemes for them.

Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG, hopes that the planned investment will further boost the German group’s leading position in Brazil in the long term. He noted that VW AG considers the country as one of its most important growth global markets, expecting demand to substantially surge in the next few years.

Brazil is VW AG’s third largest market after China and Germany. He added that the German carmaker is systematically making adjustments to its manufacturing capacity in Brazil to cater to the growing demand for its products. Aside from expanding its manufacturing capacity in Brazil, VW AG is also planning to expand its vehicle offerings in the country by introducing new models.

One of which is the new Cross Fox that will be launched at the end of the month. VW is selling the Passat CC, Eos and Tiguan as imported vehicles in Brazil. It is eyeing to produce a total of 800,000 vehicles in Brazil in 2009.

Thomas Schmall, chief executive of Volkswagen do Brasil, is confident that the carmaker will experience significant growth in Brazil and will be able to increase its market share this year. He said that VW is aiming to sell one million vehicles annually in Brazil by 2014, a target that should contribute to the success of the Group’s Strategy 2018.

Topics: vw, investment, brazil

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