Major Investment by Auto Company into Latin America
Mercedes Benz Brazil has announced a substantial investment of $340 million with the goal of launching a new range of trucks. This is part of an investment drive totalling $582.6 million scheduled to continue until 2022, despite dire predictions of the export market deteriorating. Mercedes is the industry leader in Brazil in manufacturing trucks and buses.
According to the luxury brand, they are expecting the domestic market to strengthen over the next couple of years, and as such, they are not overly concerned with the potential of exports dwindling.
Less Than 30% Are For Exports
Philipp Schiemer, president of Mercedes Benz in Latin America and Brazil, stated that Argentina is the largest market for exports, and even though the country is showing some signs of recovery, it’s expected that demand will once again plummet. Schiemer further stated that currently under 30% of the Mercedes Benz vehicles manufactured at the Sao Paolo-based Sao Bernardo do Campo factory are destined for exports, whereby this percentage used to be closer to 50%.
Grave Economic Times
In 2015, the worst recession in a hundred years hit Latin America and wreaked havoc on the Brazilian economy. According to financial experts, the country is yet again on the brink of a recession and the GDP will most likely not grow by more than 1% in 2019. Although truck and bus sales are increasing, Brazil is poorer today than what it was in 2012 and 2013 when the domestic market for vehicle sales was at its best. In spite of this, Mercedes Benz recently achieved record sales including a deal with the Sao Paolo-based beer company Ambev SA that included 500 trucks and 1,600 buses. The company is due to start a second shift in its production line to meet market needs.