“We have already started a new investment round in Brazil” – Volkswagen’s CEO in Latin America

RIO DE JANEIRO, BRAZIL –  At the helm of Volkswagen in Latin America since October 2017, Argentine executive Pablo Di Si is currently experiencing his second round of investments in Brazil after finalizing the R$7 (US$1.3) billion of the previous program, launched precisely in the year he took office.

However, the announcement of the amount and term of new investments should only occur once there is greater control of the Covid-19 pandemic. The plan is for the announcement to be made during a ceremony attended by the group’s world president, Herbert Diess.

“Of course the announcement is important, but the most important thing is to make it, and we are currently implementing our new investment round in our plants,” Di Si said.

Below are the main excerpts of the interview:

What are VW’s investment plans for Brazil?

The R$7 billion investment plan has been finalized. We are now in a new cycle. We haven’t announced yet because the plan was to invite the world president (of the assembler) for the announcement. But, because of the pandemic, we are delaying it for a while. The important thing is that this is now happening.

Is the investment larger than the previous R$7 billion round?

I can’t discuss figures, but the round is happening in many segments. Over the next two years, Brazil will undergo many changes in legislation, involving a series of norms providing for greater safety and less emissions.

Some models currently available in Brazil will cease to exist in six months, a year or two, and there will be a new generation of products from Volkswagen and other manufacturers. The investment we are making will complement our current product line, improve the level of safety and CO2 emissions.

Will it be an investment with a greater focus on product development than on expansion?

Certainly. We have four plants in Brazil, and we have good capacity.

How is the plan to bring electric cars to Brazil?

We have a plan for six vehicles over the next five years, between electric and hybrid. Brazil is not a country, it is a continent, and these hybrids are a good transition until Brazil’s complete electrification. Consumers will determine the introduction speed of these vehicles.

Today Brazil has a market share of less than 1% in electric and hybrid vehicles. If by 2030 it will be 10%, 5% or 30%, consumers will define this. It will also depend on public policies and the cost of the batteries. Regarding the product, Volkswagen will have more than 140 electric and hybrid vehicles in the next five years. We have much content. We need to check how the market will evolve in Brazil.

ANFAVEA (organization that represents the automakers) said that the head offices are concerned about the country’s politics and economy. Does this discourage investments?

Our head office is not fearful. It understands that Latin America is volatile. It is not a market that grows 1% and then drops 1%. It is a market that rises 30% and drops 40%; rises 50%, drops 20%. This instability sometimes creates tension. But the important thing is to look at the medium and long term. No one would make the investments we have made and are making if they didn’t believe in the region in the medium and long term.

What we have to be careful about is the country’s competitiveness. These are things that have been discussed for over 30 years: tax reform, administrative reform. All the inefficiency cost we have makes it difficult to export a vehicle, for instance. It is more expensive to produce a vehicle here than in another country. We always have a 50 kg backpack on our backs.

How has Volkswagen managed to overcome the parts supply crisis?

The lack of semiconductors is global, not in Brazil. So, the German team is helping us a lot. We have many problems, but the team managed to not stop a single day for lack of parts. We have daily meetings to understand what is missing, where the parts are, in which country, on which plane. We work with a high level of detail.

Is there any plan for shutdowns due to lack of parts at Volkswagen?

We have no projections, but I would not be surprised if we had to stop for two or three days.

Should the return of the vehicle market to pre-pandemic levels be fast or slow?

I think it will be very fast. When you have a supply problem it is because demand is greater than supply. These problems exist because there is a very high demand in the world, including Brazil. So, with the vaccine available, demand will grow in the second half of the year. This month, a huge amount of vaccines will arrive. As the SUS system is very good, the vaccine will reach people’s arms in a short period of time. Until June, vaccination in Brazil should accelerate considerably.

What about the future of Brazil in light of Volkswagen’s world plan to become a carbon-neutral automaker?

Before getting into the topic of electric and hybrid cars, the energy matrix of each country is important, because this is what will feed an electric or hybrid car. Brazil has 85% of its energy matrix in renewable sources. The world has only 36%. There are countries with high dependence on coal.

As Volkswagen, we will look at the chain as a whole, not just the vehicle. The strategies may vary to achieve the same goal. Here we have ethanol and biofuel. The path to carbon neutrality has no return, and Brazil and the region are not out.

Source: Infomoney