As sales of luxury cars in China start to mature, major automakers are now looking for the next country or region to offer the most growth. One of the top contenders is Brazil, which benefits from strong demand for its resources, a growing service industry and access to markets in both North and South America. Audi has already announced it will build its Q5 crossover in Mexico from 2016 onwards and now the automaker has confirmed it will build its A3 and Q3 models in Brazil from as early as 2015.

Audi will be updating an existing Volkswagen plant in the Brazilian city of São José dos Pinhais. The new Golf, which shares a platform with the latest A3, is also expected to be built at the site. Audi’s initial investment in the area will top 150 million euros (approximately $200 million). Note, Audi built a previous-generation A3 in Brazil but stopped production in 2006.

It’s not clear if the Audi models built in Brazil will be exported to the U.S., though it’s a likely scenario. The automaker has confirmed that its Q5s built in Mexico will be sold here.

The announcement of the Brazilian production is just part of Audi’s strategy to overtake BMW as the world’s largest luxury automaker by 2020 with targeted sales of two million vehicles annually. To achieve that target, the automaker is making large investments at its large production sites in Germany and Hungary. At the same time, Audi is significantly expanding its production network outside Europe. Later this year, Audi will open its second plant in China in Foshan. And by 2016, the Brazilian and Mexican plants will be online.

Rivals BMW and Mercedes-Benz aren’t sitting on the sidelines, however. BMW has already announced plans to start building vehicles in Brazil and Mercedes-Benz is eying production in Mexico and may also announce production in Brazil.


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