Volkswagen to invest €2.3 billion in Brazil over five years

Europe's largest carmaker Volkswagen AG, said on Friday that it planned to invest €2.3 billion in Brazil over the next five years and has targeted sale of one million units in the country by 2014.

According to Volkswagen chairman Martin Winterkorn, "Brazil is one of our most important growth markets worldwide. We expect demand there to rise significantly over the coming years and we are now systematically adjusting our manufacturing capacity."

He added that the company, which is already the largest carmaker in Brazil with a daily production capacity of 3,000 cars, would expand plants in Anchieta, Taubate and Sao Carlos and also rejuvenate its product line-up.
The company reported 70 per cent increase in sales to 585,000 units between 2005 and 2008. The production is expected to reach 800,000 units this year.

Brazil has emerged as a prime market for carmakers as only about one in seven people own a car while in Germany there is a car per two citizens.

The country is the German carmaker's third-largest market after Germany and China.

Global carmakers are scrambling to service emerging markets, like Brazil as that is where the action has shifted with the economic downturn. Though some recovery has been registered in the past few months in the established US and European markets, analysts say this is largely driven by the government-sponsored car scrappage.