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Scania to invest $344 million in Brazil after Ford exit


kscarbel2
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Reuters  /  May 21, 2019

Volkswagen AG truck brand Scania said on Tuesday it will invest 1.4 billion reais (US$344.14 million) to modernize its Brazilian factory in Sao Bernardo do Campo, an industrial city near Sao Paulo.

The investment in the historic center of Brazil’s auto industry follows Ford Motor Co’s decision to exit the heavy truck business in South America and shut down its plant in the same city, which could benefit the remaining players in the sector.

During the first four months of 2019, sales of Scania heavy trucks increased 31% compared to the same period a year ago, according to data compiled by local automakers association Anfavea.

The investment comes at a time when the state of Sao Paulo, which long dominated the Brazilian auto industry, has seen auto companies set up factories elsewhere, lured by tax incentives.

Earlier this year, General Motors threatened big cuts in its Sao Paulo factories. That prompted state governor Joao Doria to negotiate aggressively, ending in the launch of a new incentive package for auto makers in the state. GM then decided to invest $2.7 billion to take advantage of the tax program.

The new Scania investment will start in 2021 and end in 2024, following its 2016 to 2020 investments, which total 2.6 billion reais, the company said in a joint statement with the Sao Paulo state government.

Scania’s latest financial commitment is aimed at overhauling its assembly line, as well as introducing a new generation of trucks in Latin America.

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How ironic!  Almost sounds like some kind of back door deal was made.  Brazilian truck market very important to VW, VW's truck operation about to be spun off, Ford-VW 'partnership'.  Coincidence?  This does not bode well for CAOA.

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16 hours ago, Bullheaded said:

I just started following the forum again KS.....i missed the news.....why did Ford pull out of Brazil? Didn't they always have a huge presence there? I thought that was their biggest heavy truck market.

I think Ford made a huge mistake.....their decision is a huge loss of face in South America's key market of Brazil.

Yes, Brazil's economy has been skidding bottom with no end in sight. As a result, all the truckmakers are hurting. Even the Chinese truckmakers largely canceled their big plans to build there.

Ford's office furniture guru Hackett decided to ax commercial truck production in Brazil to cut cost (while the global truck unit Ford International is taking off nicely).

https://www.bigmacktrucks.com/topic/47464-ford-market-news/?page=24&tab=comments#comment-416185

This isn't the first time Brazil's economy hit bottom and caused pain for the truckmakers. Back in the 1990s, things were so bad that Ford and Volkswagen formed a joint venture, Autolatina*, so as to consolidate production and reduce costs.....and ensure their survival.

* From 1990 to 1995, Volkswagen trucks and buses were built at the Volkswagen-Ford AutoLatina* joint venture utilizing Ford truck components. Challenging economic conditions during the 1980s forced Volkswagen and Ford’s business units in both Brazil and Argentina to join forces and form a money-saving joint venture called AutoLatina in 1987 which lasted to 1995. VW and Ford trucks were produced together in Ford’s Ipiranga truck plant from 1990 to 1995.

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