Mercedes-Benz Expands in Brazil

By Carlos Graffigna, Contributing Reporter

RIO DE JANEIRO – For decades Mercedes-Benz has been synonymous with quality in the automotive industry, and that image helped the company weather a global recession which almost bankrupted some of the biggest and most powerful car and truck corporations in the world.

The premium market, which Mercedes has dominated for decades, gave the company enough stability to survive the recession and even post considerable profits by the end of 2009.

That momentum has driven Mercedes to expand not only their premium vehicles division, but also to compete for a larger share of the buses and truck market. The expansion just received a considerable boost by the Brazilian government, which approved a US$700 Million Dollar credit through state owned Banco Nacional do Desenvolvimento (BNDES) in order to expand their plant in Brazil.

Mercedes first established a Brazilian production line in 1956 at San Bernardo do Campo, a municipality located 27 kilometers south of Sao Paulo city. The unit has produced two million trucks and over 500,000 buses, which constitutes the largest production outside of Germany. In São Bernardo do Campo, Mercedes-Benz also has created a large Technological Development Center – CDT, developing and testing products and technologies used on buses and trucks.

The financial capital will allow the company to increase production capacity 23 percent from 55,000 to 67,000 vehicles a year, opening along the way over 1,900 new jobs. A statement released by BNDES declares, “Development of new truck models by local engineers will strengthen national engineering.”

But the investment has also come at a time where government and companies are being pressured to develop new and more efficient engines and BNDES financial commitment with Mercedes also addresses those issues. “The new diesel engine to be developed will comply with the requirements imposed by the Air Pollution Control Program for Automobiles that will take effect in 2012”, stated BNDES.

The expansion contemplates also modernization of the spare parts distribution center and three new buildings which will allow for equipment and machinery maintenance, development of new models, final truck certification and packing production.

Almost 3,000 trucks and 6,500 buses are produced in Brazil and exported to over thirty countries, among them Argentina, Chile, Peru, Egypt, Nigeria, South Africa and Jordan.

With this new capital investment, Mercedes-Benz continues their effort of holding on to their significant market share in Brazil where currently half the trucks, and 70 percent of the buses in Brazil are already branded Mercedes-Benz.