Volvo Plans to Build Plant in Brazil image

Volvo plans to build a $247-million plant in Brazil, but waits for details on new regulations for the country’s auto industry.

Volvo, which was recently bought by China’s Zhejiang Geely Holding Group from Ford, plans to build its first plant in Brazil and manufacture 15,000-20,000 cars annually. The only obstacle is Brazil’s decision concerning the auto-industry rules, which will go into effect next year.

The country’s government aims at avoiding a flood of imports by boosting car taxes by 30% in 2011, with exemptions granted to cars with a specific amount of locally produced content. From 2013 car makers that manufacture cars locally, invest in development and research and also buy parts made in Brazil will also be exempted from the increased tax.

That is why several auto makers including Volkswagen, Fiat, Ford and GM announced their plans to build factories in Brazil. According to Paulo Solti, president of Volvo Car da America Latina, the company will spent 2 years building the plant, which will begin production in 2015. Volvo hasn’t yet chosen the exact location, but it is expected to build the plant in Sao Paulo or Parana, as it sells vehicles in mainly the wealthier southern regions of Brazil.