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Audi, Volkswagen to Build $750 Million Brazilian Plant

12/12/96

Reuters reports that, on Tuesday, German luxury carmaker Audi AG and its parent company Volkswagen announced their plans to build a $750 million plant in Brazil. The two companies will share the facility, which is the latest in a series of recently announced auto industry investments in Brazil. Audi President Herbert Demel said, "we are sure that Brazil is now mature enough for a luxury mark in the car market." Demel met with Brazilian President Fernando Henrique Cardoso.

The two carmakers will build their new plant in the state of Parana, in southern Brazil, which gives them good access to the Mercosur trade bloc (Argentina, Paraguay, Uruguay, Brazil). Construction will begin early next year and last until 1999. The plant is slated to make 60,000 units yearly, 30,00 each of Audi's new A-3 small car and Volkwagen's yet-to-be-released Vento model. Audi expects to be able to sell 25,000 A3's to Brazilians each year, and plans to ship the remaining 5,000 to other countries in Latin America.

The two carmakers will invest about $250 million apiece into the new factory, which Audi will manage. An additional investment of $250 million is expected to come from suppliers.

Last week General Motors announced plans to invest $1.25 billion in three new Brazilian plants. Ford and Fiat also have announced plans to expand their existing output in Brazil. Renault, Toyota, Mercedes Benz, and Asia Motors have also recently announced investments in the country. Analysts expect automobile industry investment in Brazil to reach about $19 billion between now and the year 2000.

Paul Dever -- The Auto Channel