Mercedes-Benz has announced their expected Brazilian investment, choosing to build their plant in Iracemapolis, about 170 kilometres (105 miles) northwest of Sao Paulo. The plant will be finished in 2016 and build next-generation C-Class as well as the upcoming GLA SUV. Making no bones about taking on Audi and BMW, in a statement, Daimler's head of car and van production, Andreas Renschler, said "Brazil is an important future market. With local production we accept the challenge and take on the competition." As is true of Audi, Mercedes' investment will be a return to Brazilian passenger car production. Daimler had converted its Juiz de Fora car plant to truck production in 2011, where the heavy-duty Actros is built. The Brazilian plant is in addition to investment in Mexico.
Significance: This move has long been expected, with Daimler boss Zetsche confirming interest as recently September, and is driven both by the expected growth in Brazil and the tax structure that encourages domestic production. IHS Automotive forecasts Mercedes sales will reach 2.1 million by 2020, with 47,00 units in South America. This investment also increases plants ready to build products off the new MFA platform, due to be under about 575,000 Mercedes-branded units in 2020. Mercedes is forecast to sell fewer than 10,000 units of the C-Class annually in Brazil, but the plant can also supply export markets across the region. Mercedes first investment into volume production in Brazil began in 1999 with the Juiz de Fora plant which cost of USD820 million and was expected to produce around 70,000 A-Class vehicles per year. Annual output peaked at around 12,000 units as the original A-Class did not sell well in the region. It subsequently made the low-volume CLC coupe model until being converted to build Actros HCV's in 2011.
