The Volkswagen brand aims to make significant gains in South America with a major product offensive. By 2027, the company plans to grow by 40% in Brazil, the region’s largest market. For example, 15 new electric and flex-fuel vehicle models are being launched by 2025 alone.
Hybrid vehicles will also follow in the medium-term. Before the end of 2023, the company is bringing its first fully electric models to Brazil: the Volkswagen ID.4. and the ID. Buzz. In total, the South American automotive market is expected to grow 11% a year until 2030, making it one of the fastest growing markets in the world.
ID. Buzz and ID.4 are coming to Brazil
As a fast-growing car market, South America is of strategic importance to Volkswagen. In recent years, the local team has achieved the turnaround and sustainably improved profitability and competitiveness. The task now is to continue working on the cost position and at the same time implementing the product offensive. To this end, we are investing one billion euros in South America by 2026.—Thomas Schäfer, CEO Volkswagen Brand
The South America region had returned to profitability in 2021 after many years and already made a significant contribution to earnings in the following year 2022. The region is striving for further improvements as part of the ACCELERATE FORWARD | Road to 6.5 performance program.
The €1-billion investment will support, among other things, the development of ethanol-based combustion engines and new business models. For example, more than 3,000 car subscriptions were taken out in Brazil in 2022 at Volkswagen; this number is expected to grow by around 150 percent in 2023. At the same time, Volkswagen will offer its first fully electric vehicles—the ID.4 and the ID. Buzz—in Brazil as subscriptions in 2023, thus driving its transformation to a sustainable mobility provider.
The company expects the transformation towards pure e-drives in Brazil to be less dynamic than in Europe; the overall share of pure BEV vehicles in 2033 in the Brazilian market is estimated at around 4%. However Volkswagen aims to grow faster than the market in the BEV segment.
Until the market is fully electrified, Volkswagen will rely on alternative drives and openness to technology. For example, all new models produced in the region will continue to be able to run on 100% biofuel. The engines developed in Europe will be adapted and developed in Volkswagen Brazil’s newly opened development center specifically for this purpose.
The flex-fuel vehicles developed by Volkswagen in Brazil can basically run on ethanol and gasoline, as well as any mixtures of these fuels. In Europe, a maximum of ten percent biofuel is added (E10).
One focus of Volkswagen’s product offensive is the A0 and A segment, as well as CUVs / SUVs – the fastest growing market segment in the world. The A0 segment already makes up nearly 40% of the South American market and will also continue to grow disproportionately to the market.
Ethanol derived from sugar cane is a sustainable fuel resulting from the fermentation of sugar using yeast. Compared to gasoline, this reduces greenhouse gas emissions by up to 80%. Sugar cane fields for ethanol production make up less than 0.8% of Brazil’s land. Nearly 92% of cane sugar is harvested in south-central Brazil, the remaining 8% in the North-Eas—nearly 2,000 kilometers from the Amazon region. The biofuel can therefore make a decisive contribution to the short-term reduction of CO2 in this region of the world, Volkswagen says.
Volkswagen began production in Brazil 70 years ago in São Paulo; the Brazil plant was also the first Volkswagen plant outside Germany. Twelve employees were assembling parts imported from Germany there at the beginning. Today, Volkswagen is Brazil’s largest automobile manufacturer, having produced a total of 25 million vehicles in 70 years, four million of which were exported. The company develops and produces the Polo, Virtus, Nivus, Taos and T-Cross models, among others, at four plants in the country and sells the cars through around 500 dealerships.