Dive Brief:
- The Volkswagen brand is investing over $1 billion in South America by 2026, according to a company press release Tuesday.
- The company wants to grow its business in Brazil, the region’s largest market, by 40% by 2027, the press release says.
- Volkswagen will focus on electric and flex-fuel vehicles, launching 15 EVs and flex-fuel models in the region by 2025. It will offer subscriptions for its ID.4 and ID. Buzz models in Brazil later this year.
Dive Insight:
The South American car market will grow 11% annually until 2030, Volkswagen said. The region became profitable again in 2021 and significantly contributed to the company’s 2022 earnings, the press release says.
“As a fast-growing car market, South America is of strategic importance to Volkswagen. In recent years, the local team has achieved the turnaround and sustainably improved profitability and competitiveness,” Volkswagen Brand CEO Thomas Schäfer said in a statement. “The task now is to continue working on the cost position and at the same time implementing the product offensive.”
But the company’s EV strategy in Brazil could take a while to pay off, with analysts estimating that pure battery-electric vehicles will make up just 4% of the total vehicle market in 2033.
Volkswagen has made 25 million vehicles in Brazil since it started producing vehicles there 70 years ago. The company manufactures four models in Brazil at four manufacturing plants. It has about 500 dealerships in the country.
Reuters reported Wednesday that Audi, part of Volkswagen Group, plans to produce EVs in Mexico. The company plans to make the announcement July 18, according to Reuters.
