Renault announced its plans to boost production at its Brazilian plant with 25% by 2013.

Although there are concerns about rising costs in Brazil, the company still decided to expand the string of recent investments. Olivier Murguet, the company’s top executive in Brazil, said that the rising costs are affecting competitiveness in the country and increase doubts about any investments.

“If we hadn’t yet made these investments, I don’t know if we would be so bold now,” he told reporters on Thursday at the inauguration of a steel cutting line in the southern state of Parana. “But these expansions are midstream. So you go ahead and cross the river.”

Several car makers have idled investments in Brazil and also some lines after the slowdown registered in the first half. There are also doubts that the government, which tries to stimulate the affected economy, will extend industry incentives and tax breaks.

But Renault, which is struggling in Europe, relies on growth in the emerging markets such as Brazil. The company will invest 40 million reais ($19.5 million) to boost capacity at the Brazilian facility to 500,000 units annually. In 2011 the plant offered 360,000 motors for cars manufactured by Nissan and Renault for Latin America.


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