Despite the continuing challenges of the Covid-19 pandemic and the worldwide semiconductor shortage, Volkswagen (VW) expects to report a positive result in Latin America for the first time since 2013.

Moreover, VW says it will invest around 1 billion euros over the next five years to further strengthen its competitive situation in this important market and be geared to sustained profitability.

In addition to further local vehicle projects, digitalisation and decarbonisation in South America are to be given an additional boost. This includes a research centre for biofuels as a bridging technology for this market to complement VW’s ‘global electrification offensive’.

Ralf Brandstätter, VW’s CEO, said: “Latin America is an important future market for Volkswagen. Over the last two years we have achieved a very good starting position in the region through a very consistent restructuring programme. We are now driving implementation of our ‘Accelerate’ strategy with a major investment programme, strengthening our competitive position in the region and thus gearing up for sustained profitability.”

Following the deep recession of 2013, Volkswagen is ‘celebrating a remarkable comeback’ on the Latin American market, with an expected return to profit in the 2021 financial year. This success is in part attributable to systematic reductions in fixed costs as well as capacity adjustments at the six plants in the region under a restructuring programme.

At the same time, VW launched a ‘comprehensive model campaign’ in 2017 to radically renew its product portfolio: 20 new models tailored to the needs of the South American market debuted in the space of four years, most of them built locally at Volkswagen plants in Brazil.

Pablo di Si, president and CEO of Volkswagen Latin America, added: “The high level of future investments in our region demonstrates the great importance of the Latin American market for VW. This is based on three key success factors: the excellent productivity of our plants achieved through consensus with the unions; the outstanding performance of the entire team; and our strong focus on the wishes of Latin American customers.”