VW taps Brazil growth with Virtus model

VOLKSWAGEN launched its new Virtus model yesterday to tap Brazil’s highest-volume segment as part of a recovery plan that analysts said would help it regain ground on rivals General Motors and Fiat in South America’s largest car market.

Returning to profit in markets such as Brazil, the United States and Russia is vital for Volkswagen as it pushes to revive the core VW brand that accounted for more than half the group’s 7.8 million sales in the first nine months but only 19% of underlying profit.

To tap rebounding demand in price-sensitive Brazil, VW would unveil the Virtus compact sedan in Sao Paulo, the carmaker said, after starting deliveries in the country of the redesigned Polo subcompact, one of its all-time bestsellers, and a roomier, bigger Up! minicar.

The world’s biggest motor firm last week announced ß560-million (R9.4-billion) of spending in Argentina to build the first sports-utility vehicle in Brazil’s neighbour.

It aims to launch 20 new models in South America by 2020, when it wants to be profitable again in the region.

“Renewing our product portfolio in Brazil is absolutely essential,” VW brand chief executive Herbert Diess told a conference in Berlin last week.

VW, which slashed about 7 000 jobs in South America in past years and shrunk its dealer network, wants to reduce the average age of the brand’s Brazilian lineup to less than five years by 2020 from eight years in 2015, Diess said.

Brazil was one of the world’s five biggest motor markets until the 2014-16 downturn and remains a major base of operations for Fiat Chrysler Automobiles, GM, VW and Ford.