Volkswagen, now the largest Euro automaker, has a plan to invest $3.55 billion into Brazil from 2010 to 2014 as business in Latin America rise to record heights.
The German based automaker said it would use up to 40 percent of the investment to increase car and vans production, Thomas Schmall the chief executive of Volkswagen’s Brazil unit went on to say that “There’s a huge growth potential in Brazil.”
Volkswagen is going a similar path to Ford Motor which last week announced plans to increase investments in Brazil to $2.3 billion over five years. Local companies are boosting spending expanding capacity in the country as vehicle sales head to a record 3 million units this year.
Sales of new cars, trucks and buses rose to 2.6 million in the year through October, 6.1 percent more than in the corresponding period a year earlier, discounting used vans and cars, according to the Brazil automakers’ association, Anfavea, which estimates automakers would spend $18.1 billion in the four years through 2012 to increase potential output to 6 million.
Schmall expects demand for vehicles in Brazil will rise between 3 percent and 6 percent next year. Volkswagen sales may increase as much as 8 percent, he said.
“It’s a joint commitment: if the government cuts taxes, which has a cost, we must do our part,” Schmall said.
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