Ford Focuses on Brazil - Analyst Blog

Ford Motor (F) has revealed its plan to invest R$4 billion ($2.26 billion) in order to benefit from government tax incentives and lower interest rates in Brazil that are fueling record sales. Presently, Ford is the fourth-largest automaker in the country.

Ford has decided to spend R$2.8 billion at the Camacari plant -- a state-of-the-art plant in the northeastern state of Bahiato -- with the aim of increasing output by 20% to 300,000 vehicles a year. The plant produces the sport utility vehicle EcoSport and the Fiesta subcompact. The investment is expected to generate 1,000 jobs in the region. The remaining R$1.2 billion will be invested at Ford's factories in Sao Paulo including its Sao Bernardo plant and a testing facility in Tatui.

So far, car sales in Brazil have been significantly helped by government tax incentives that lowered car prices and lured consumers to showrooms. But the tax breaks are scheduled to expire by the end of the year. However, the investment will allow Ford to achieve state and federal tax breaks from the Brazilian Government until 2015.

Being the fourth-largest automaker in Brazil, the investment will no doubt help Ford strengthen its position to tap the huge market potential in the country, edging it past peers such as Italy's Fiat, Germany's Volkswagen and some Asian and French manufacturers. According to the Brazilian automobile dealers' association, automobile sales in the country are expected to grow by 9% in 2010.
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