VW Plans to Invest $529M in Brazil for Golf and Audi Production image

VW is expected to officially announce a $529-million investment in Brazil to start production of the new Golf and restart manufacturing for the Audi brand.

This move is part of VW’s plan to quickly expand overseas and catch up with German rival, BMW, the luxury-market leader. VW’s decision to expand in Brazil comes soon after the government announced its plans to increase taxes on the imported vehicles and offer tax breaks for the automakers which will boost local investments.

As opposed to BMW which built a new plant in Brazil, VW will make an investment of $529 million to expand its plant in Sao Jose dos Pinhais. Audi plans to start production in Brazil in 2015 and manufacture 26,000 A3 vehicles annually in about three years. The plant will also build the Q3 compact SUV and VW will invest around $350 million to add production of the new Golf.

As wages started to increase in Brazil, the country has become a focus point for the global market of luxury goods. Audi entered this market in 1999 with production of the A3 at the Parana facility. The model was jointly manufactured with VW. The German automaker stopped production at this facility in 2006.

Source: Reuters