According to international monetary fund and the World Bank, Brazil is the largest national economy in Latin America. Brazil has current GDP per capita of $10.200 which ranked as the 64th position according to the World Bank data. Moreover, it is also predicted that Brazilian economy will become a top 5 largest economy for the next decade. Brazilian economic activities include agricultural, manufacturing, mining, and also service sectors.
In addition, Brazil labor force are also ranked as 6th worldwide and their unemployment rate which is 6.2% is ranked as 64th (Economy of Brazil, 2008). Brazil also considered as the fourth largest car market in the world (Mat, 2013) which makes them a very potential market for Mercedes Benz.
Back in 2011, Mercedes Benz decided to expand their current production in Juiz De Fora, Brazil. Daimler AG which is Mercedes Benz’s parent company decided to expand the production of Mercedes Benz Actros which is a truck type vehicle. According to Jurgen Ziegler, the president of Mercedes Benz Brazil, The country has been Mercedes’s Benz largest truck market. In early 2010 which is before Mercedes Benz decide to expand their production, the sales for truck type vehicle has reach 45.174 units in their first 5 months (autoevolution.com, 2010).
Out of 45.175 units sold, 18.047 (autoevolution.com, 2010) were sold by Mercedes Benz Brazil meanwhile the remaining units were imported. Jurgen Ziegler also state that the expansion in Juiz De Fora in producing truck type is a part of concept calling for an expansion or an attempt to excess their production capacity because the earlier production plant which is located in Sao Bernardo Do Campo will reach its production capacity in 2012.
More over, Ziegler also state that they expect the sales will increases due to rapid growth in Brazil economy conditions. In addition, Mercedes Benz decided to expand the production of truck unit in Juiz De Fora because of the high qualification of the employees and also the modern installations.
Mercedes Expansion Concept:
Mercedes Benz Brazil decided to expand their production capacity by adding a new production plant in Juiz De Fora. They believe that the sales are expected to increase due to the rapid growth in Brazilian economy. Before adding a production plant in Juiz De Fora, Mercedes Benz Brazil has their previous production plant in Sao Bernardo Do Campo which according to the president of Mercedes Benz Brazil, will reach its production capacity limit in 2012.
At the same time, they also will increase the production of truck and bus unit of vehicle up to 75.000 units per year by 2012 which means they need another capacity as well as investments. In order to bolster their market leader position, once again they will increase their production capacity by integrating Juiz De Fora production plant into Mercedes Benz commercial vehicle production network.
Therefore, the production plant in Juiz De Fora which previously only produced passenger cars will also produce truck type car (Mercedes benz actros) and they will also bring positive impact to the business which are better supply chain, additional employment, and investments.