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GM Brazil announces an investment of over $1 billion for increasing production and developing new car models

 

The General Motors’ subsidiary company in Brazil has announced plans to spend $386 million in developing and producing a new model of the Chevrolet (without giving further information on the model specifications). This new investment announcement comes only two months after GM announced that its operations in the country would invest $780 million in a bid to increase output and produce two other new models. The company said it sold over 595,000 vehicles in Brazil in 2009, generating a 19% market share in an Industry dominated by Fiat SpA, Volkswagen and Ford Motor Co.

 

This new investment adds to GM’s continued push for a larger market share with mega deals and ventures. In March, the company made a whopping $778 million investment in its factories in Sao Paolo state, a move that was aimed at expanding the factories and modernizing them to meet its competitors challenge. The expansion and modernization of GM’s facilities is geared towards increasing production capacity under the company’s Brazil strategy through 2012 with the aim of reaching the wider South American market.

 

The company expects the plan to renew its portfolio of Chevrolet vehicles in the country and increase its sales. Currently, the plant in Sao Caetano do Sul, outside Sao Paolo city, produces 7 Corsa models while the other production facility near Mogi das Cruzes is particularly aimed at auto parts productions.

 

GM Brazil employs about 21,000 people in the country and Brazil and China have been crucial to its survival as a global brand. During the financial meltdown, robust sales in the two countries kept the company afloat as it underwent a tough restructuring period. This was, firstly, due to Brazil’s big market, the largest in Latin America, and its position as the biggest automobiles producer in Latin America as well.

 

During its cut backs at the height of the recession, the company’s Brazil operations were spared due to the fact that it was the company’s third largest market after the base in US and China and was its most valued asset in terms of profitability and growth potential, said GM’s Brazil subsidiary president.

 

Regardless of the company’s crisis and decline in sales last year, its car and light-truck sales are expected to grow 8% this year in Brazil. The company has admitted before that Brazil offers an example of what it needs “to get the business right” by reducing models, forming a more flexible workforce and gaining concessions from dealers and suppliers. This new $386 million investment in Brazil is reflective of the company’s realization that Brazil has great potential for growth and heavy returns investments.

 

June 2, 2010.