Volks prepares new investment plan for Brazil
Valor Econômico
Volkswagen is about to announce a new investment plan in Brazil. This time, besides the renewal of products, the German maker needs to increase the productive capacity in order to keep up with the growth of the Brazilian market that, according to its calculations, will reach 40% until 2014. The new investment plan will be announced before the end of the year, according to the company's CEO, Thomas Schmall. The amount required has already been defined, but it cannot be revealed because it depends upon the authorization of the headquarters, in German. The last Volks investment plan in Brazil amounted to R$ 3.2 billion (US$ 1.78 billion). The initial schedule had foreseen using these funds between 2007 and 2011. But the necessity of speeding up the investments in the last months led, now, to the anticipation of a new program.
One of the main symbols of the car industry in Brazil since the installation of the sector in the country in the 50's, Volkswagen keeps a pace that reflects not only the expansion of the car market but also the economic growth of the country. In 1990, Volks held 40% of the Brazilian market of light commercial vehicles and passenger vehicles. With the arrival of the new car makers - the number of car brands since then jumped from 11 to 30 -, its share decreased to less than 25%. Nonetheless, the annual sales of the company in the period leaped from 257 thousand to 586 thousand in 2008. It currently owns nearly one fourth of a market that is almost five times bigger. This is more than General Motor has in the United States (nearly 18% of the domestic market).
In 1990, 661 thousand cars and light commercial vehicles were sold in Brazil. This year the total volume should get to near 3 million. Volks management foresees the domestic market should get to 4 million in 2014. The company decided to prepare itself to have one fourth of such total. But the Germans are not alone in the bets of increase of the Brazilian market. The Volks announcement of more investments, which has three car plants and one for engines in Brazil, adds to the plans of other car makers that already amounted to nearly US$ 12 billion only up to 2012. Among the recent announcements is GM's plan to invest R$ 2 billion (US$ 1.1 billion) in the Rio Grande do Sul plant.
Volkswagen's management does not disregard, for instance, the ambition behind the purchase of a piece of land in Sorocaba by Toyota, the biggest car maker of the world. Even though the Japanese maker does not have detailed numbers, it is known that besides it, other Asian car makers, like Korean Hyundai, are getting themselves together in order to enter with greater strength in the Brazilian market.