Automakers facing increased risks due to Brazilian auto crisis image

The country’s auto industry experts believe the Brazilian slump this year will be the worst since 1998, according to a forecast made by the national automakers association Anfavea.

The industry group negatively modified its target for the entire year for the second time in two months and Anfavea believes that internal automotive production will plummet 18 percent from the figures of last year – in April it predicted a 10 percent decline. Local sales are also predicted to dive 21 percent for the year, which is sharply going down from the 13 percent drop forecasted earlier. The Brazilian auto market was until recently the fourth largest globally but its crisis has rippled across the profitability of global automakers – including the top four domestic automakers: Fiat Chrysler Automobiles, Volkswagen Group, General Motors and Ford. Anfavea figures showed Fiat was still the country’s brand, selling 36,100 new cars and light commercial vehicles last month. GM followed in second place with 30,600 units, immediately shadowed by VW’s almost 30,000 autos. Ford took the fourth spot with 23,300 vehicles.

Automakers have invested heavily in adding jobs and production locations in what was a booming market just a couple of years ago, with austerity measures now impacting both employees and production locations as the companies strive to keep profitability up. The past crisis in Brazil was back in 1998, when carmakers dropped around 19 percent of their employee base as auto production output dropped 23 percent and sales plunged 21 percent. May figures showed the recent boom years are nowhere near now, with production and sales of cars, trucks and buses stagnating at around 10,000 units per day.

Via Automotive News Europe