Automakers Look to Brazil for Growth

Carmakers frustrated by slumping sales in Europe and cooling expansion in China are counting on future demand in Brazil to spur growth.

BMW confirms it will invest more than €200 million ($260 million) to erect a new assembly plant in Brazil's southern state of Santa Catarina. The company expects to employ 1,000 people at the facility, which would open in 2014 with capacity to make 30,000 vehicles.

Volkswagen AG, which calls Brazil "a cornerstone" in drive to become the world's largest carmaker by 2016, is spending €3.4 billion ($4.4 billion) to expand its lineup and capacity there.

At the Sao Paulo auto show on Monday, other automakers unveiled an array of new models, a number of them designed specifically for the local market. Most companies are betting on rising sales of luxury vehicles, small cars and compact SUVs and crossovers.

General Motors gave show-goers the first look at the Chevrolet Onix developed by its Brazilian unit. The company expects the subcompact, which is due 2014, to account for nearly one-third of its sales volume in the country. CEO Dan Akerson says GM underinvested in Brazil before its bankruptcy in 2009 a mistake he vows not to repeat.

The company also intends to expand its Cadillac brand there. "The rich are becoming richer in Brazil," says GM South America chief Jaime Ardila.

Honda apparently agrees. It plans to introduce its Acura luxury brand to the country in 2015. The company also showed off the Honda Fit Twist, a variant of the Fit compact designed for Brazilian consumers. Honda expects to debut a new lineup of flex fuel vehicles which are big sellers in Brazil including versions of the Civic compact car and CR-V crossover vehicle.