PUEBLA CITY, Mexico (Reuters) -- Audi will not build a vehicle assembly plant in Brazil until the laws governing what exactly is required to ensure a car is considered locally built are clarified, CEO Rupert Stadler said.
"We are studying now some details, but even the government is not really clear when it comes to localization, what type of parts do they mean?" Stadler told reporters in Puebla City, Mexico, on Saturday.
He spoke after Audi celebrated the laying of the foundation stone in a nearby town for a $1.3 billion plant that will open in mid-2016 to build the Q5 crossover for North America and global markets.
Brazil is the world's fourth largest automotive market and many automakers are opening plants there to avoid tariffs on imported vehicles. Audi officials have said in the past the company might add a plant in Brazil.
Audi rival BMW has said it plans to open a factory in Brazil in late 2014.
While Audi has the necessary government approvals to proceed if it wanted, Stadler said he won't invest without more clarity. "It has to be clear," he said. "What are the conditions? What is the requirement for localization? This is very complicated, so it needs some time."
Bernd Martens, Audi's purchasing chief, said a decision on possibly producing cars in Brazil should be made this year. "From a strategic point of view it would be good to be there because the economy is developing and we believe the number of people who can afford an entry-level premium car is set to grow," he said.
Audi is looking into producing cars using VW's modular toolkit system in Brazil and may do so on a smaller scale within one of VW's existing plants in the country, he said.
Stadler also said the opening of the Mexican plant does not close the door on the brand some day building vehicles in the United States. "That's absolutely open in the future because it always depends what car do you discuss, where is the main market and is the framework the right one," he said.
Audi parent Volkswagen Group builds the VW Passat sedan at its plant in Chattanooga, Tennessee. Audi has no production in the United States.
Bloomberg contributed to this report