Volkswagen brand CEO, Dr. Herbert Diess, and the President of Argentina, Mauricio Macri, announce the investments at Volkswagens plant in Pacheco, Argentina

Volkswagen brand CEO, Dr. Herbert Diess, and the President of Argentina, Mauricio Macri, announce the investments at Volkswagen's plant in Pacheco, Argentina

Volkswagen is investing EUR560m over the next five years to build a new SUV model for the South American market from 2020 at its Pacheco, Argentina, plant.

From 2020, the plant will deliver the new model built in Argentina to the entire South American continent. The new vehicle project will create some 2,500 jobs, VW says.

"We are laying the foundations for the brand's growth on international markets with Volkswagen's Transform 2025+ strategy. South America and Argentina play an important role in this regard," said Herbert Diess, CEO of the Volkswagen brand.

"Key elements of the growth strategy are the biggest model offensive in the history of the brand and the systematic regionalisation of our business. We will be underpinning our positioning at the top of the volume segments and winning further market share with new models from Volkswagen tailored to the wishes of customers in the markets," Diess said.

Under its Transform 2025+ the VW brand is increasingly delegating responsibilities previously controlled centrally from Wolfsburg to the regions. VW says the regions will hold full responsibility for the entire scope of business activities – right through to decisions relating to the model range. In addition to South America, responsibilities have also been delegated to the regions of North America, China and the Sub-Saharan area of Africa.

MQB-based

The design, size and equipment of the SUV planned for 2020 and based on MQB engineering architecture technology is 'targeted to appeal to a broad customer base on the South American continent'.

"Volkswagen believes in the great potential of the South American continent. The investments create the optimal conditions for the efficient production of our new SUV – built in Argentina for the markets in South America," Volkswagen South America's CEO Di Si said.

Volkswagen says it has launched the largest product offensive in its history in South America: 20 new models based on the Modular Transverse Toolkit (MQB), including a 'totally revamped pickup range and further locally-built SUVs, will be launched in the region by 2020'.

Assuming a positive overall market trend, the company plans to move back into the black in South America by 2020. Currently, it says there is a significant increase in deliveries in the region - which has faced political and economic headwinds in recent years. VW says there were 36,000 deliveries this year in the period to the end of October, an increase of over 60% compared with the same period in 2016.

VW says that key drivers behind this positive development are Brazil and Argentina. Growth in the small car segment, which includes the Gol and Voyage, in these markets is particularly strong.