MercoPress. South Atlantic News Agency

Brazil a magnet for auto manufacturers: Land Rover and KIA with plant plans

Jaguar-LandRover Brazil CEO Flavio Padovan. “We have great interest in remaining in this market”.

Jaguar Land Rover will likely decide before the end of this year whether to build a factory in Brazil, local President Flavio Padovan said on Tuesday. South Korea’s KIA Company is also considering the manufacturing plant option following the increase in import taxes.

JLR is studying new auto industry rules that go into effect starting next year and is weighing its options, said Padovan at the Sao Paulo Auto Show. “There are still some details missing before we can finalize our plan, but we have great interest in being here in Brazil.”

Padovan said that it makes more sense to begin producing Land Rover vehicles at a possible factory rather than Jaguar models, due to the limited scale of Jaguar sales. JLR sales for Latin America this year will likely reach 12.000 vehicles, up from 10.500 in 2011, he said.

Brazil sales have suffered from a 30 percentage-point hike in import taxes, but sales should improve somewhat next year. That is because next year the government will exempt up to 4.800 vehicles from the higher tax.

”With the quota (receiving a tax discount), sales in 2013 will be better than 2012, but still not as good as 2011“ Mr. Padovan said.

In related news the President of KIA Brazilian operations said he was hopeful that the South Korean company will decide to build a plant in the Latin American country.

Jose Luiz Gandini, who heads the Brazilian operations, expects to sell about 45,000 KIA cars this year, a big plunge from the almost 76,000 vehicles he sold last year. Higher import taxes put in place at the end of 2011 and lasting through 2017 has cut sales drastically and will likely keep sales at the 45,000-to-50,000 level next year, anticipated Gandini at the Sao Paulo Auto Show.

”We can survive, but sales will fall“ Mr. Gandini said. ”KIA isn't going to throw this all away. I have faith that it will happen,” he said, referring to talks about a factory in Brazil.

KIA partner Hyundai is building a Brazil plant, but Gandini brushed off the possibility of shared production at the factory because Hyundai wants to take full advantage of capacity there.

German carmaker BMW top executives met on Monday with President Dilma Rousseff and announced plans to build a factory in southern Brazil, a more than 200 million Euros investment expected to create 1,000 jobs. The luxury car giant hopes to start building the plant in April next year and producing cars in late 2014.