Brazil auto industry, which accounts for one fourth of the country’s GDP, is going through the throes of depression. Thousands of workers from the industry have been laid off or forced to go on leave while during the course of this year 250 of the country’s 8,000 dealers have shut shop with 12,000 jobs lost as a result.
Brazil auto industry sales have dipped for the fifth consecutive month in May 2015. This drop in sales was noted across the segment right from passenger to commercial vehicles. A 27.5% dip in vehicle sales was reported during the month of May 2015, with a total of 212,713 units sold. Taking into account sales during the period January to May 2015, auto sales have dipped 21% to just 1.1 million units.
Reasons for falling 2015 Brazil auto sales could be attributed to weak economic activity coupled with higher inflation and interest rates which have combined to dampening the enthusiasm of new buyers in the country.
General Motors Brazil has downsized its workforce putting 467 workers of its Sao Caetano do Sul plant on paid-leave in May 2015 while the company also granted 15 days paid vacation to 1,700 employees at their Sao Jose dos Campos plant. Volkswagen extended vacations and paid leave to 8,000 of its 13,000 workforce at its Brazil plant.
In April, Anfavea, the Brazilian automakers association, had estimated a 10 percent drop in production and 13 percent dip in sales. Since then estimates have been revised to a slip of 17.8 percent dip in production while sales will drop 20.6 percent.