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Brazil automakers halt production, put employees on vacation

Kudrenok Tatyana
23 March 2023, 14:39

Brazil automakers halt production, put employees on vacation Photo:

BRASILIA. KAZINFORM - Several automakers announced this month that they will grant collective vacations to employees and halt the production of vehicles in their plants in Brazil, for several reasons. They range from lack of equipment and COVID-19 pandemic effects to problems caused by the Brazilian economic scenario, especially with high-interest rates and inflation, which have led to a drop in vehicle sales, Agencia Brasil reports.

Volkswagen was the first one to interrupt production. It halted its activities in February in São Bernardo do Campo (São Paulo), São José dos Pinhais (Paraná), and in the engine plant in São Carlos (São Paulo), due to a lack of parts. The three units have resumed their normal activities. However, the automaker announced that it will put its employees—at the Taubaté plant (São Paulo)—on collective vacation for 10 days, starting on March 27, «for the maintenance of the unit's production and due to instability in the component supply chain.»

At Hyundai Motor Brasil, collective vacation started Monday (Mar. 20) for the three production shifts and administrative teams at the plant in Piracicaba (São Paulo). The interruption will last until April 2, but it will not affect the operations of the engine plant, located in the same industrial complex. According to the company, the purpose is to adjust production volumes for the month of March, avoiding the build-up of stocks. The company indicated that it will follow the dynamics of the domestic vehicle market for the first quarter of this year.

Mercedes-Benz do Brasil informed that it will send part of its workers from the plant of São Bernardo do Campo (São Paulo) on vacation—between April 3 and May 2—due to «the need for adjustment in the production program.» According to the automaker, this measure is necessary because of the lack of components in the global and domestic automotive industry and to adjust the sales volumes of the commercial vehicle market.

GM and Stellantis will also grant collective vacations to their workers, interrupting production in the plants in São José dos Campos (São Paulo) and Goiana (Pernambuco).

In an interview on Tuesday (21) with Agência Brasil, Professor Antonio Jorge Martins—coordinator of automotive courses at the Getúlio Vargas Foundation—said the shutdowns and collective vacations were motivated basically by increased costs that, consequently, raised the price of vehicles and the financing costs.

For Martins, the production stoppage of vehicles should not be prolonged or last too long. «The strategy of the automakers is not to halt for a long time. The ones that have stock will stop a little longer. Those that have less stock will stop for a shorter time, but the strategy is really to adapt production to a new demand reality. The professor estimates that the automotive sector will close this year with between 2% and 5% growth in relation to last year.

The National Association of Car Manufacturers' Financing Companies (Anef) stated that 2022 was strongly impacted by the increase in vehicle prices, as well as by the increase in default and interest rates. It pointed out that the default of individuals with payments in arrears of more than 90 days has reached 5.9 percent in 2022, the highest rate in recent years.

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