Volkswagen is exporting cars to China and expanding factories in Brazil in order to protect itself from declining demand in Europe.
To avoid building up inventories of unsold cars, VW has slowed production in Europe, CEO Martin Winterkorn said at the Sao Paulo motor show. VW also plans to export 200,000 cars made in Europe, including Audi and Skoda models, to China in 2013, as the automaker becomes more cautious on Europe.
To reduce its exposure to Europe even further, VW also plans to invest 3.4 billion euros in upgrading its model lineup and factories in Brazil through 2016. 126 million euros will be used to expand production at its component plant in Sao Carlos to 4,800 engines a day from 3,800 at present.
According to Winterkorn, Brazil is a cornerstone of VW’s strategy to become the world’s largest carmaker by 2018. VW has a strong position in Brazil, built during nearly sixty years of presence in the country. Car sales in Latin America’s largest country are forecast to grow 8.6 percent to 3.28 million vehicles in 2012, according to IHS Automotive.
Even though the European car market is set to witness its biggest annual drop in 19 years, VW is maintaining its 2012 targets, whichinclude matching last year’s record operating profit of 11.3 billion euros.