Audi Gearing for Manufacturing Comeback in Brazil

VIENNA – Audi will launch assembly of its cars in 2015 at Volkswagen’s plant in Sao Josedos Pinhaisin the state of Parana, Brazil.

The decision marks the revival of VW Group’s luxury brand’s output in Brazil. The Sao Jose dos Pinhaisfacility built the Audi A3 Sportsback between 1999 and 2006.

The auto maker plans to launch assembly of the Audi A3 sedan from complete-knocked-down kits in September 2015, with the Audi Q3 cross/utility vehicle to be added in mid-2016.

“By producing in Brazil, we will create the basis for further growth,” Audi CEO Rupert Stadler says in a statement.

By 2015, the auto maker intends to invest €150 million ($203 million) at the Sao Jose dos Pinhais facility. Because of the Audi project, the plant will receive an additional assembly line and its paint shop will be expanded.

The auto maker expects to sell about 7,000 imported cars in Brazil this year but does not provide volume targets for the new project.

‟We plan to sell significantly more than 30,000 cars in Brazil in 2020,” including imported units, spokesman Joachim Cordshagen tells WardsAuto.

Although initial volumes appear relatively small, the auto maker plans for sourcing of up to 35% local content.

“For the production of the A3 sedan, we want to purchase a lot of components locally,” Bernd Martens, Audi management board member responsible for procurement, says in a statement. “We, therefore, plan to establish close relationships with Brazilian suppliers at an early stage.”

Audi does not disclose the sources of the assembly kits for the Brazilian operation. But, for example, parts such as large stampings for the A3 sedan likely will come from its Audi Hungaria Motor facility in Gyor, Hungary. The VW subsidiary SEAT’s Martorell, Spain, plant, where the Audi Q3 is made, also is expected to ship parts to Brazil.

The sedan and CUV will be manufactured in China as well.

Audi will further expand its worldwide production network later this year, when its second Chinese plant starts production in Foshan. In Russia and India, Audi cars are assembled from semi-knocked-down kits.

The Brazil announcement represents another step in Audi’s globalization strategy.  “With the decision in favor of Brazil, we are ideally positioned in all BRIC (Brazil, Russia, India, China) countries,” Stadler says.

Audi broke ground in May on a new factory in San Jose Chiapa, Puebla, Mexico, to produce some 150,000 Q5 CUVs annually starting in 2016.

According to Stadler, Audi in 2014 expects to build more cars outside Germany than in its domestic plants for the first time.

BMW plans to launch output in a new Brazilian factory with initial capacity of 30,000 cars annually in 2014. Daimler may decide by the end of the year whether to resume production in the country. Mercedes-Benz cars were assembled there between 1999 and 2010.