Honda is rumoured to be planning a new car plant in Brazil, according to a report in Bloomberg. According to undisclosed sources cited by Bloomberg, the automaker will invest BRL1 billion (USD433.7 million) at the plant to be located in Itirapina, about 200 kilometres north west of Sao Paolo. The plant is expected to begin production of compact cars from 2015.
Significance: Honda was reported in May as evaluating over a dozen locations in Brazil to establish a second plant in the country. Honda has one production location in Sumare, Sao Paulo, but this is approaching full capacity. After the economic recession of 2008/09, several global automakers have increased their presence and accelerated the pace of production in emerging nations such as Brazil, owing to shrinking demand in developed regions, including the United States and Europe. Despite a slowdown in domestic demand of late, production of light-vehicles in Brazil remains buoyant and grew 12.8% year-on-year to 299, 549 units in June, according to data published by industry association Anfavea. In May this year, South Korean automaker Hyundai reached an agreement with the local metalworkers' union to add a third shift at its plant in Sao Paulo, in a bid to boost production capacity, while Volkswagen (VW) reiterated that it will invest BRL8.7 billion on its Brazilian operations by 2016. Long-term forecasts for Brazil remain positive.
