Ford Motor Co. (F) has announced its plan to invest $200 million in Brazil over the next 5 years on top of an investment of $2.2 billion announced last year. The new investment is aimed at developing a new Ford EcoSport small sport utility vehicle (SUV) for the global market.
In November last year, Ford has revealed its plan to invest R$4 billion ($2.2 billion) in order to benefit from government tax incentives and lower interest rates in Brazil that are fueling record sales.
The automaker has decided to spend R$2.8 billion ($1.5 billion) at the Camacari plant – a state-of-the-art plant in the northeastern state of Bahia – with the aim of increasing output by 20% to 300,000 vehicles a year. The plant produces the existing model of EcoSport SUV and the Fiesta subcompact. The remaining R$1.2 billion ($700 million) will be invested at Ford’s factories in Sao Paulo and a testing facility in Tatui.
So far, car sales in Brazil have been significantly helped by government tax incentives that lowered car prices and lured consumers to showrooms. But the tax breaks have expired last month and the government has no plans for renewal. However, the investment will allow Ford to achieve state and federal tax breaks from the Brazilian government until 2015.
Ford is the fourth-largest automaker with a 10.1% market share in Brazil, Latin America’s largest economy. The investment will no doubt help Ford consolidate its position to tap the huge market potential in the country, edging past peers such as Italy’s Fiat (FIATY) , Germany’s Volkswagen (VLKAY) and some Asian and French manufacturers.
In 2009, Brazil’s auto sales rose 11.4% to 3.14 million vehicles. Ford’s sales increased 16.9% to 304,007 vehicles in the country. According to Brazilian automobile dealers’ association, automobile sales in the country are expected to grow by 9% in 2010.
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