Volkswagen Expects Slower 2013 in Brazil

Features Reuters

Volkswagen AG, Europe's largest automaker, expects sales growth in Brazil to slow this year, a senior executive said on Monday, adding that the pace of investments in local factories will hinge on sales
in the coming months. 

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Sales of cars and light trucks are likely to expand around 2% in 2013, said Thomas Schmall, VW's most senior executive in Brazil, down from 6 percent growth last year.

That would be the weakest sales growth in a decade for Brazilian passenger vehicles, highlighting a challenging moment for the world's fourth-largest auto market and a key element of VW's global growth plan. A fragile economic recovery, expiring tax breaks and tighter credit have cooled Brazil's demand for new cars after a consumer boom that doubled sales in five years.

Schmall said new regulations to encourage more research and development in the country may boost VW's Brazilian investment plans, but the expansion of factories such as the Taubaté plant in Sao Paulo state will hinge on sales.

"The project (in Taubaté) is a good one, but it depends on the market,'' Schmall told journalists at an event introducing soccer legend Pelé as VW's spokesman in Brazil. ``I'm not seeing major growth this year ... March sales will be a key indicator.''

Schmall also said VW's luxury brand Audi is likely to start producing cars locally again, joining a wave of competitors focusing on Brazil's multiplying millionaires. Audi's A3 is the most likely candidate for local production, given the overlap with other VW platforms produced in the country.