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Ford Brazil Truck Pull Out Leads To Investment By Competition

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Ford opted to pull out of the heavy truck market in Brazil since it saw significant losses in the country. The pull out means that Ford’s largest Brazilian factory will be sold off and Brazilian manufacturer CAOA is trying to team with a Chinese partner to buy the facility. Ford Brazil has reached an agreement with the workers union for the factory that will see the workers go with the plant when it sells.

As Ford is pulling out of the Brazilian market, its competition is ramping up in the country. VW AG’s Scania heavy truck brand has announced that it will be investing in modernizing its factory in Sao Bernardo do Campo, the same city Ford’s factory is located in. VW will invest $344.14 million into its factory.

2015 Ford Ka (Brazil)

Ford Brazil vacating the heavy truck market means more sales for others in the segment. Scania is doing much better in South America than Ford Brazil, Scania’s heavy truck sales have increased 31 percent from the same period a year ago. The investment in the Sao Bernardo do Campo factory is a big deal for the local economy as well. The city was once a major manufacturing hub and has lost new investments to other parts of Brazil due to tax incentives offered.

Scania plans to start its new investment in 2021 and end the investment in 2024 once its 2016 to 2020 investments are over. The money will go to overhauling the Scania assembly line and the introduction of a new line of trucks to the South American market. Scania is in the third place spot in heavy trucks in the Brazilian market behind Mercedes-Benz and Volvo. Another Ford competitor, GM, has invested $2.7 billion in Brazil thanks to tax incentives offered in the country.

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Source: Reuters

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Shane is a car guy with a fondness for Mustangs and off-roading.

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