General Motors Brazil will invest R$2 billion (US$1.033 billion) to launch a new Chevrolet line of vehicles and to expand its plant in Gravataí, Rio Grande do Sul. The investment is the largest made by the company in its 84 years in Brazil.
Included in the investment program is the renewal of the current line of Chevrolet vehicles in 2012, and the launch of a new line of small cars (two models) for Brazil and emerging markets—“Project Onyx.”
About R$1.4 billion will be invested in the development of the new vehicles and in the Gravataí plant, which currently produce the Celta and Prisma. The remaining $600 million will flow to GM’s other operations in Brazil.
With the new investment, the Gravataí plant will have a capacity of 380,000 units a year within three years, more than tripling the initial installed capacity of 120,000. The two new models of Project Onyx are scheduled to reach the market from 2012.
This will be the second expansion to Gravataí. In 2005 and 2006, it received investments of about US$480 million, resulting in the launch of the Chevrolet Prism in October 2006 and the expansion of its production capacity to 230,000 vehicles per year.
Funds for the investment will partly come from the company’s cash flow and retained earnings in recent fiscal years—GM Brasil has been profitable since 2006. The company will also reviewing funding of R$344 million and is in negotiations with BNDES and BRDE (Banco Nacional de Desenvolvimento Econômico e Social and Banco Regional de Desenvolvimento Econômico) for new capital.
The engineering and design centers located in São Caetano do Sul and Indaiatuba will have full control of the development cycle of any of the vehicles. Brazil is one of five major GM global centers of development.
In 2008, GM Brazil recorded record annual sales of 548,941 vehicles, with Chevrolet leading in four segments. GM was the first company in the Brazilian automobile sector to produce 100% of their vehicles (except for the diesel driven) with the flex fuel supply system.