VW said to consider planning center in Brazil to revive sales

Volkswagen Group is considering setting up a planning center in Brazil to boost flagging sales in the world’s fourth-largest car market, sources told Reuters.

Slowing growth in Brazil, once one of the most dynamic emerging economies, and an aging model fleet have weighed on VW. Sales have plunged 18 percent in the first half to 271,700, after a 13 percent decline in 2013.

VW is mulling establishing a so-called development and planning center to ensure its vehicles cater more effectively to the needs of Latin America’s biggest economy, two sources familiar with the matter said on Thursday, declining to be identified.

VW intends to spend €3.6 billion ($4.85 billion) on new models, plants and technology in Brazil through 2018.

The plan is part of a wider drive by the carmaker to revive its flagging fortunes in South and North America.

A VW spokesman denied the plans.

VW said last week it would set up a similar center at its U.S. plant in Chattanooga, Tennessee, to help reverse declining deliveries. The carmaker aims to hire about 200 engineers to monitor the world’s No. 2 auto market more closely and revamp vehicles more quickly.

U.S. sales of VW’s core passenger-car brand have been shrinking since a surge in 2011 and 2012. This is threatening the automaker’s long-term targets. Six-month deliveries fell 13 percent to 179,000.

Despite the country’s economic decline, carmakers continue to bet on Brazil’s revival. VW Group’s Audi brand will spend 150 million euros to start production in 2015 at a VW facility in Sao Jose dos Pinhais. Meanwhile luxury rival BMW is spending 200 million euros on a plant in Santa Catarina to start production in late 2014.