Eyes On Export Mkts, Volkswagen Brazil Names New Model

Monday 4:08 pm ET

SAO PAULO August 25, 2003; Andrea Welsh writing for Dow Jones reported that with its eyes on growing exports and slumping domestic sales, the Brazilian division of Volkswagen AG will market a new passenger car to be built here as the Fox.

The German carmaker decided on the Fox name over the weekend, passing over other potential candidates like the Tupi, which refers to a Native American tribe indigenous to Brazil.

"The (Fox) name has global characteristics and can be used in any country where the new car might be sold," said Volkswagen in a statement.

Growing auto exports have been the only ray of hope for Brazilian carmakers like Volkswagen, after watching domestic sales slump more than 8% over the first six months of this year. Automakers invested billions to expand capacity here over the past decade, only to see sales steadily decline.

Exports, on the other hand, are expected to rise 20% this year thanks to a weaker local currency and a recently inked trade deal with Mexico.

Volkswagen has been quick to grab a slice of the growing export market, and the company's Gol model is now the top seller in both Mexico and Argentina. But VW's performance in the bigger and more important domestic market has fallen short. Long the top seller of cars here, the company fell behind both General Motors Corp. and Fiat SpA in the first half of 2003.

Volkswagen Brazil's new president, Paul Fleming, expects the new Fox model to help his company win back the top spot at home. VW has embarked on a restructuring of its Brazilian operations under the leadership of Fleming, who took over as president about a year ago.

The carmaker, which employs some 25,000 workers in Brazil compared with GM's 17,000, announced last month that it will lay off nearly 4,000 workers here. Talks with labor leaders are still underway.

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