Volkswagen to invest US$1.26 billion in Argentina and Brazil to manufacture new family of cars

RIO DE JANEIRO, BRAZIL – “The region is an important market. In the past 2 years, we achieved a very good position through our consistent restructuring program. Now, we are driving the implementation of our Accelerate plan, strengthening our competitive standing. We proved that we can be profitable despite a low overall market and challenging conditions. We continue to invest in projects that safeguard sustained profitability in the future,” said Volkswagen global CEO Ralf Brandstätter.

“The high level of future investment in our region is evidence of Latin America’s strong market relevance. This is based on three key factors: the productivity of our plants achieved with the support of union agreements, the outstanding performance of the entire team and our focus on customer needs,” said Volkswagen Latin America president and CEO Pablo Di Si.

The Polo Track is the first confirmed model of this compact car family, which will expand the regional product portfolio. It will be developed with the MQB platform and will be manufactured at the Taubaté plant in Brazil, starting in 2023, and will be sold to different Latin American markets.

There is no confirmed date as to when it will be sold in Argentina, although it is expected to reach the country within the next 2-3 years, once it starts to be manufactured. Local production is not foreseen for the time being.

However, Volkswagen foresees new developments in the pick-up segment for Argentina. In this respect, the Tarok Project (a compact pick-up that could share the Taos production line at the Pacheco Industrial Center) has been mentioned. Di Si did not provide any further details.

The Polo Truck will begin production in 2023 in Brazil. Other vehicles will start production between 2023 and 2026. Di Si did not provide details, but said that “some products will be manufactured exclusively in Argentina and others only in Brazil.” The group did not specify the investment to be made in each country.

The new Polo model is intended to be an accessible and simplified version of the current Polo, with the same modular base used by other models manufactured in Brazil. However, there will be changes: the grille and bumper will be different, for instance.

“The use of the MQB platform will cut costs and the company will develop a fast-growing, efficient and technologically advanced market segment,” Di Si said.

Volkswagen renewed its portfolio in the region over the past 4 years. In 2017, it launched 20 new models tailored to South American market demands, most of them manufactured in the Brazilian plants, such as the Virtus, Nivus and T-Cross; and the Taos, with more than 11,000 units produced in Pacheco, Argentina.

SUSTAINABLE MOBILITY

In addition to expanding its product portfolio, Volkswagen seeks to become a supplier of sustainable mobility. In this respect, part of the capital injection announced will be allocated to the Biofuels Research and Development Center in the region, as part of the “Way to zero” goal set by the automaker to achieve carbon neutrality by 2050.

“Electric mobility is both the core and the leading technology to decarbonize transportation. In the long term, this is also true for Latin America. Bioethanol is a significant complement, as it reduces carbon emissions by up to 90% compared to gasoline,” Di Si said.

Despite the global challenges posed by the pandemic and the semiconductor shortage, the executives anticipated that Volkswagen expects to post a positive result in Latin America in 2021, thanks to “systematic reductions in fixed costs and capacity adjustments in the region’s 6 plants.”