VW Vows €1.8 Billion Expansion Plan for Brazil

Volkswagen AG says it plans to invest €1.8 billion ($2.1 billion) by 2020 to introduce 20 new models in Brazil.

The initiative aims to reverse the effect of Brazil’s economic downturn in 2014-2016 that prompted VW to eliminate 7,000 jobs and shrink its dealer network in the country.

VW announced the new strategy today as it introduced the first of its new models, the Virtus. The Brazil-developed small sedan is a variant of the company’s Polo hatchback. VW will produce the car at its Anchieta plant near Sao Paulo, which is undergoing €660 million ($777 million) in renovations.

The Virtus rides on VW’s ubiquitous MQB front-wheel-drive MQB platform. The car will debut in Brazil with a turbocharged, 3-cylinder engine that makes 128 hp and runs on gasoline or ethanol. VW will sell the model is several markets but not in the U.S.

The Brazil program announcement comes a week after VW said it will spend €560 million ($653 million) in Argentina to launch output of a small SUV/crossover vehicle. Code named Tharu, the vehicle reportedly will be a variant of the Skoda Karoq crossover, which is already in production in the Czech Republic.