Fiat in talks to open a second car factory in Brazil

Article by Christian A., on December 11, 2010

A source close to the government of Pernambuco, Brazil, told Reuters that Fiat S.p.A. is in negotiations with the state to open a second car factory in Brazil. The unnamed source says that Fiat wants to build the factory in the industrial complex of the port of Suape.

A formal announcement about the deal is expected to be made on Dec. 14, 2010 when President Inacio Lula da Silva visits the state.

The negotiations come as the Company's Brazilian factory is operating at nearly-full capacity to meet increasing demand for cars and as other automakers like Hyundai and Toyota are also planning investments in factories in Brazil.

Fiat, when contacted by Reuters, said that the company and the government of Pernambuco are maintaining negotiations about possible investments in the state. The Fiat factory in Minas Gerais, Brazil has output capacity of around 800,000 cars annually.

Company executives have recently said they could increase sales in Brazil by using idle capacity at the firm's Cordoba, Argentina plant. Fiat also announced plans to invest BRL10 billion ($5.8 billion) by 2015 in Brazil, a plan that includes auto parts, cars, and agricultural equipment.

About 70 percent of the total will be invested in cars, with the company expecting in 2011 to launch 20 new models or upgraded versions of current ones. [via autonews - sub. required]

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