Volvo will invest 1.5 billion BRL in Brazil by 2025

Volvo will invest 1.5 billion BRL in Brazil by 2025

Volvo Latin America will invest R$ 1.5 billion in Brazil from 2022 to 2025. The group informs that it will focus on the development of new trucks and buses. In addition, the company intends to bet on expanding the service offering.

Volvo did not disclose whether the investment includes the electrification process for trucks and buses. It also did not say whether it will offer new gas models. In any case, the company started testing electric buses in Santiago de Chile. They will also race in Bogotá, Colombia.

According to the Volvo company, part of the money will be used to complete the necessary modifications for its trucks and buses to meet the Euro 6 regulations in Brazil. The new phase of the plan, called Proconve P8 in the country and targeting large vehicles, will come into force on January 1, 2023.

According to Volvo’s president in South America, Wilson Lirmann, engine and vehicle improvements had already begun. That is, part of the process was predicted in the previous cycle of the company’s investment in the country. “There are still a few steps to go,” he says.

Shopping prospects

The new round of investments begins at a time of good prospects for the Brazilian truck market. According to Volvo’s president, sales of models in the 16-ton range are expected to grow by 10% in 2022. It is in this segment that Volvo is working with heavy and semi-heavy models.

“Demand will come from sectors with high export potential, such as agribusiness, paper and mining,” says Lirmann. According to the executive, there should also be prospects for the purchase of fleet renewal by other carriers. That’s because, to meet Proconve 8, cars will introduce innovations that will make them more expensive.

According to Volvo data, the costs of manufacturing a truck to Euro 6 standards are between 15% and 20% higher. That is, trucks with Euro 5 engines will be more attractive. Therefore, it is possible to see a rush to buy these models. Especially in the last quarter of this year.

According to experts consulted by streetfor consumers the prices of Euro 6 trucks should be 13% to 23% higher than those of the same models at the Euro 5 level. Of course, the values ​​may vary depending on the vehicle and the manufacturer.

Be that as it may, the decision regarding the new investment in Brazil is also related to the brand’s positive results in 2021. “This feeds Volvo’s confidence and commitment to the future in the country”, says Lirmann.

Volvo’s best year in Brazil

According to Volvo, 2021 was the best year for the brand since its arrival in Brazil. in 1979. In the heavy segment, the brand sold 17,980 units. In addition, Volvo FH540 it was the best-selling truck in Brazil, with 8,935 units.

Another highlight for Volvo in 2021 was the sales of the VM line. The increase, of 81% compared to 2020, means 6,393 registered units. In total, the brand sold 21,823 trucks in Brazil in 2021. Therefore, it grew 45.7% over the previous year. That is, the results were above the market average.

As a result, the Brazilian operation has become the second largest Volvo truck division in the world. Therefore, it is second after the United States. “Brazil maintained its position even in times of limitations due to the pandemic and supply chain constraints,” says Lirmann.