GM to Expand Production in Brazil

General Motors of Brazil is planning to invest $1.2 billion in its production facilities, making it the biggest investment since GM arrived in Brazil in 1925.

Jaime Ardila, CEO, GM of Brazil, clearly stated the money won't arrive from the parent company, but from its subsidiary's own resources. He continued saying some $176 million in additional funding are being raised from Banco do Estado do Rio Grande do Sul (Banrisul) along with other resources targeted to be gathered from national and regional development banks BNDES and BRDE.

The resources will be directed to expanding the Gravatai plant in the southern region of the country and to develop and begin production of a new vehicle family. As Inside Line reported, the plant's production capacity will be raised from 120,000 to 380,000 units a year.

The news was very well received by the automobile community and Brazil's economic sector, giving the fact that the current economic crisis slowed down every sector of the economy all over the world. But despite the bad global economic climate, GM Brazil reported sales in June of over 300,000 vehicles, setting a record for the aforementioned month. In the same direction went GM's first-half sales in Brazil, with a 3 percent increase over the same period from 2008.

The plan includes a $840 million being invested in the Gravatai plant and the launch of a new Chevrolet product line. The plant was very successful with the production of two-door Celta hatchback and later the four-door Celta and the small Prisma sedan. All models had 1.0- and 1.4-liter engines that featured low fuel consumption and affordable retail prices.

The investment is estimated to add 1,000 jobs to the plant and from related suppliers.