Volkswagen is set to invest $577 million at one of its Brazilian facilities.
Reuters reports that the German car manufacturer made the announcement as Sao Paulo state governor Joao Doria was making a visit to the VW headquarters in Germany.
Doria has been pushing for automakers in the thriving Brazilian city of Sao Paulo to retain their manufacturing plants in the area following moves from other states across the country to introduce generous tax incentives to attract carmakers. This year, Doria announced a tax plan that will see car companies granted a 25 per cent reduction in value-added taxes if they invest at least 1 billion reais ($239 million) at their Sao Paulo factories and create at least 400 new jobs.
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The governor was encouraged to introduce the tax incentive following an announcement from General Motors late last year that it could close or severely reduce its operations in the state due to heavy financial losses.
According to the Sao Paulo state, Volkswagen’s investment at its Anchieta plant in São Bernardo do Campo, about 20 km (12 miles) from Sao Paulo city, will create 1000 new jobs as part of the significant investment.
The Anchieta site was established in 1957 as Volkswagen’s first plant in Brazil and the first Volkswagen plant outside of Germany. The plant has built more than 13.8 million vehicles and currently employs over 8600 people. It handles production of models including the Polo, Virtus, Saveiro and Saveiro Cross.