Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

VW bets on Brazil rebound with SUV, Honda remains cautious

Published 04/04/2018, 16:24
Updated 04/04/2018, 16:30
© Reuters. The Volkswagen logo is seen on a vehicle at the New York Auto Show in New York
VOWG
-
7267
-

SAO PAULO (Reuters) - Volkswagen AG (DE:VOWG) plans to produce its first SUV in Brazil, it said on Wednesday, betting on a rebound in Latin America's market despite signs of caution from rivals such as Honda Motor Co (T:7267).

VW said in a statement it will invest 2 billion reais ($595 million) to manufacture the T-Cross compact SUV at its Sao Jose dos Pinhais plant in southern Brazil.

It will start selling the T-Cross in the first half of 2019, it said, adding that the project is part of 7 billion reais of planned investments through 2020 to refresh the line-up in its "largest product launch offensive ever" in Brazil.

VW's market share in Brazil has shrunk over the past decade as new entrants opened local factories just as a recession took hold. An export-driven rebound in the sector last year and record-low interest rates have renewed hope for some global carmakers.

Not everyone is convinced. Honda said separately that it will consolidate all vehicle production in its Itirapina plant, converting a 20-year-old factory in Sumaré from vehicles to engines and other parts.

The transition should be complete by 2021 at the plants, both of which are located in the state of São Paulo.

Honda announced the new Itirapina plant earlier this decade as a way to double capacity in Brazil amid booming domestic demand, but the downturn interfered with the plans, a press officer said on Wednesday.

On Tuesday, the government said Brazil's industrial output expanded in February at the slowest pace in five months, underscoring an uneven pace of economic recovery in the first quarter of the year. [nL2N1RG0HP]

Honda's Itirapina plant was finished in April 2015 with capacity to produce 120,000 vehicles per year in two shifts, but the carmaker has so far kept the lines there idle.

"Though the local market recently recovered, the growth outlook remains below volumes previously forecast," Honda's statement said.

© Reuters. The Volkswagen logo is seen on a vehicle at the New York Auto Show in New York

($1 = 3.363 reais)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.