Daimler to build new Mercedes plant in Brazil
September 9, 2013, 9:36 am

Mercedes says it made more financial sense to establish a plant in Brazil [Getty Images]

Zetsche told German daily Stuttgarter Zeitung that Daimler would decide the location for the plant in Brazil this year.

Daimler says it made more financial sense to establish a plant in Brazil than export compact cars to Latin America’s biggest economy.

“It was simply a question of either producing in Brazil or not to be present there at all in this segment. Our decision is: We want to take part,” said Zetsche.

An earlier report by German magazine Der Spiegel said an assembling plant for Mercedes Benz would start operations in 2015 in Brazil.

Brazil is the world’s fourth-biggest car market. Demand in the automobile market is expected to grow in the country as it prepares to host the FIFA World Cup in 2014 and the Olympic Games in 2016.

“With the new compact class we have cars on offer that are attractive and can be produced at low costs, making them a good fit for this market,” Zetsche said.

Soaring exports especially to the United States helped the Brazilian auto industry lobby group to raise its 2013 production outlook last week.

Last year, the Brazilian government announced tax breaks for carmakers to increase investment in the country. President Dilma Rousseff renewed the tax breaks till the end of 2013.

According to National carmaker association Anfavea, in the first seven months of the year, dealerships sold 2.14 million new vehicles in Brazil, up 2.9 per cent from the same period of 2012.

Finance Minister Guido Mantega had also said last year that auto makers are planning to invest $22 billion in Brazil over the next three years.

Japanese car maker Honda said in August that it will invest around $440.55 million to build a new car plant in Brazil.

Attracted by Brazil’s growing auto market, Chinese automaker Chery’s also announced recently that its new $400 million plant in Brazil will be operational this year.

Daimler AG develops, manufactures, distributes, and sells a wide range of automotive products, mainly passenger cars, trucks, vans and buses.

The BRICS Post with inputs from Agencies