Volkswagen In The Americas

Already the dominant automaker in Europe and second in global sales to Toyota, Volkswagen CEO Martin Winterkorn revealed intentions to revamp sales efforts in the US and Brazil.  Among new decisions will be design and production of a new mid-sized SUV specifically targeted to the US market, as well as a potential Audi manufacturing plant in Mexico.  Volkswagen has increased global sales past GM four years earlier than expected, most of this growth attributed to expansion of China’s economy.  With the US GDP steadily rebounding from the recent crisis, Volkswagen intends to stimulate stagnant sales.

Unlike the US, Brazil’s capital market has for years appeared unappealing to investors and international business until very recently.  An IMF report on Brazil from 2012 contends Brazil has strengthened domestic markets through development and renovation of its financial sector.  “Financial development is important for fostering economic growth and stability,” wrote IMF analyst Joonkyu.  An author from World Finance notes the exponential growth in Brazilian IPOs in the recent decade as evidence of significant financial (and thus economic) growth.  Between 1995 and 2003, there were a total of six IPOs in Brazil; this to be compared with over 100 IPOs between 2003 and 2011.  With Brazil’s large economy and growing middle class consumption (World Finance article), Volkswagen seems in a good position to experience continued success.

 

http://www.autonews.com/article/20140513/GLOBAL/140519979/vw-says-it-expects-new-suv-to-revitalize-u-s-sales-as-it-outlines

http://www.worldfinance.com/markets/what-does-the-future-hold-for-the-brazilian-stock-market

http://www.imf.org/external/pubs/ft/wp/2012/wp12224.pdf

7 comments to Volkswagen In The Americas

  • mayolj16

    Surprisingly this is one of the first times that Brazil gets mentioned in one of the blogs. Brazil has a fast growing middle class, a strong high class, and numerous car factories so I find it interesting that it has not been mentioned by any of our blogs nor by any of the plans for expansion of the car manufacturers.

  • Zachary Durkin

    I know that Volkswagen is one of the only producers of diesel cars in the United States. Will this new SUV targeted specifically towards the American market be a gasoline or diesel vehicle?

    • In Brazil 3 fuels are available: gasoline, CNG and biofuel (ethanol), all competing on price and with many vehicles equipped to take all 3 so you buy whatever’s cheapest at the pump that day. I know nothing about commercial vehicles, I assume that as elsewhere they’re diesel.

  • Kuangdi Zhao

    Brazil is one the the BRICS countries (Brazil, Russia, India, China, South Africa). Last year, BRICS countries agreed to open a joint bank to protect themselves from financial instability. If Brazil needs financial assistance in time of emergency, it can get help from BRICS development bank, as well as from IMF and World Bank. Therefore, in theory, Brazil is perhaps the most financially secure country in South America. Currently, Brazil has an inflation rate of 6% and high interest rate. These two rates have the potentials to drop in the long run. So VW should be confident about the Brazil market.

  • Kade Kenlon

    If Brazil has tons of potential why aren’t more car companies looking for profits in the country.

    To Zach, if VW is looking to appeal to the American market they will most likely produce gasoline powered engines considering the majority of American consumers are looking for gas powered engines or already own them.

    • What makes you think there aren’t? – this post was based on a VW press release so of course they don’t mention the competition, which includes Ford and especially Fiat.

  • Louis Ike

    I am interested to hear about the idea of expansion by VW into Brazil. I remember on one of the early trips during this class one of the executives we were speaking with mentioned how incredibly difficult it was to set up a stable working business relationship in Brazil. The executive pointed out the large corruption and infrastructural barriers as huge disadvantages to attempting business in Brazil. However, it seems that Brazil may have solved some of these issues, but the true test will come this summer when Brazil is under a microscope hosting the World Cup.

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