Volkswagen (VW) Truck & Bus announced on 1 December its plans to invest EUR420 million (USD446 million) into its Brazilian operations. The investment will support new products and product modernisation over the next five years. The plant in Resende will be modernised, its product portfolio renewed, and its connectivity services developed, according to a company statement. "We believe – despite the current market situation – that Brazil is an important market for trucks and buses. It has always been a key market for the German industry and it will be again. I am confident that the Brazilian economy has bottomed out and will recover again in the next few years. In order to be prepared for this, we are now taking money into our hands to be able to continue to offer excellent products and state-of-the-art production. The entire Latin America region plays a major role in our growth strategy," said Andreas Renschler, CEO and member of the Board of Management of VW with responsibility for commercial vehicle activities.
Significance: Aside from the overview, VW provided no details on its plans for the investment, including direction for the connectivity plans. IHS Markit's economists forecast Brazil's economy will stabilise as 2016 comes to a close, although still returning a negative real GDP change of 3.26%. In 2017, we forecast slight GDP growth of 0.51%, although 2018 and 2019 are forecast to return to 3.8% and 4.0% growth. VW Truck & Bus sales in Brazil dropped to 9,242 units in 2015, down from 21,476 units in 2014. We anticipate a long and slow recovery for Brazil, with VW's commercial vehicle sales bottoming out at about 6,400 units in 2016 then returning to slow growth in future years.
