Increasing sales of electric cars in Europe lead Volkswagen to shift its combustion engine production to Brazil and Argentina

Motivated by the wave of electrification of European cars, Volkswagen decided to transfer part of its production of combustion engines from Germany to factories in San Carlos, in the state of Sao Paulo, Brazil, and Cordoba, Argentina, where the electric car segment still crawling, according to Pablo Di Si, president of the automaker for South America.

This shows that while the global automotive industry is going towards its "electrification", Brazil's automotive market still has few electric car models. There are currently 4 electric models and some hybrids. This means that the Brazilian market will lag behind the industry's technological innovations for some time.

Thus, we will continue driving excessively expensive cars that pollute the environment for years to come.

German company leads the truck market in Brazil in 2019

Volkswagen Trucks and Buses (VWCO, in the acronym in Portuguese) led the truck sales in four of the five segments analyzed by the Brazilian National Association of Trucks, and Automotive Vehicle Manufacturers (Anfavea), in February 2019.

In the accumulated of the year, three of the five most sold trucks in the Brazilian market are from Volkswagen.

This leadership is a direct result of Volkswagen Trucks and Buses' decision to invest R$ 1.5 billion between 2017 and 2021 at the Resende plant in Rio de Janeiro. Currently, the Resende plant employs about three thousand employees and is the company's worldwide production and development center for trucks.

Paulo Guedes, Brazilian Minister of the Economy, denies requests from automakers and maintains free trade in auto parts with Mexico

Brazil is one of the largest car producers in the world. In February 2019, the country produced 257.2 thousand cars light commercial vehicles, trucks, and buses, accumulating a growth of 5.3% in the first two months of the year, reaching 455.3 thousand units.

Paradoxically, car prices in Brazil are among the highest in the world. In some cases, there are cars that cost more than 100% than in other countries. Among the main reasons for such prices are the very high-profit margins of resellers, taxes and infrastructure problems in the country.

The current Minister of Economy of Brazil believes that some of these problems can be solved with more economic openness.

Last March 29, in a meeting with representatives of the country's three largest automakers (General Motors, Fiat and Volkswagen), Guedes said he would not reestablish the quota system that regulated the automotive trade between Brazil and Mexico, believing that it was time for the country to open its economy.

The representatives of the automakers were criticized by government officials during the meeting, who would have said that the automakers had received R$ 20 billion in subsidies in the last five years. Since March 19, cars and auto parts circulate between Brazil and Mexico without import tariff. Now, the two countries will be able to export and import those products without any barriers.

The Brazilian sectors of Foundries, Auto parts and Assemblers will face a real "competition shock", since these sectors in Mexico are among the most competitive in the world. Therefore, there is a fear on the part of the Brazilian automakers that the parent companies prefer to invest in Mexico instead of Brazil.

In February 2019, Ford announced the closure of its São Bernardo plant in the state of São Paulo, where 3,000 people work, and the company's exit from the South American truck market. Thus, the company's North American headquarters decided to close its subsidiary in São Bernardo.