MercoPress. South Atlantic News Agency

German premium automakers dispute Brazilian market: Mercedes plans factory in Sao Paulo

The factory will produce the next-generation C-class mid-sized sedan and GLA compact SUV

Germany's Daimler plans to build a new car factory in Brazil, becoming the third German premium automaker to announce such plans within the past year. The company announced it would invest around 170 million Euros to set up a shop in Iracemapolis, near Sao Paulo.

The factory will produce the next-generation C-class mid-sized sedan and GLA compact SUV, Daimler said in a statement. The company expects to produce 20,000 units a year at the plant.

“We will be localizing two highly attractive products with top Mercedes quality, for which we see great potential in the Brazilian premium segment,” said Andreas Renschler, head of production and procurement at Mercedes-Benz Cars.

Daimler, also the world's largest truck-maker, stopped building cars two years ago in the Brazilian state of Minas Gerais, converting the plant to assemble commercial vehicles.

CEO Dieter Zetsche has vowed to reclaim the No. 1 position in global premium-auto sales by the end of the decade after losing the top spot to the BMW brand in 2005 and ceding second place to Audi in 2011.

Luxury carmakers are flocking to Brazil to exploit growing demand.

BMW and Audi have also recently announced plans for Brazilian factories. The carmakers are opening assembly plants to bypass high import taxes limiting their growth in the country.

BMW plans to start production in Brazil's southern state of Santa Catarina next year and is investing 200 million Euros in the new facility. Audi said last month that it will revive vehicle production in Brazil with an investment of 500 million Rais (225 million dollars) through 2016.