Brazil is now faced with three years of declining sales and with voices in the industry claiming that unused production capacity could be above 50% in 2015. Still, automakers are ready to endure the beating in hope of better prospects in the near future.
Although currently the market – with Brazil being the largest economy in South America – is anything but a success story, the carmakers have faith in its auto industry. They are willing to pledge more than $30 billion by 2018 to increase production capacity at existing facilities or build new plants.
Still, the yield prospects are tailored to the current situation: BMW for example only spent $250 million for a new factory in the country, which opened earlier this month and could reach an output of 32,000 units per year during the next three to four years. That compares to a $1 billion investment in Mexico to construct and operate a plant that could churn out of its production lines 150,000 vehicles before the decade ends.
Nissan and Mercedes-Benz have also revealed plans to build new facilities in Brazil, valued at a total of $1.2 billion, but they also pledged another $1.4 billion on a joint venture in Mexico on top of the Japanese automaker’s $2 billion plant that is already producing cars.
The global players do not ignore Brazil because it’s a huge market – currently the world’s fifth largest, but executives say the country’s rising costs, inadequate infrastructure and a general lack of trade agreements make the country a poor export hub.
Via Automotive News Europe