Brazil’s car market is slipping from a year ago as Brazilians strain under record household debts and banks reject more auto loans in response to greater defaults.
The US based automaker General Motors said on Wednesday it offered a buyout plan for workers at a Brazilian factory after automakers in the country scaled back output in May to the slowest in three months, idling factory lines to draw down massive inventories.
GM didn’t respond to calls or an email seeking comment.
Brazil’s government last month announced tax cuts on auto sales and eased banks’ reserve requirements on car loans after auto credit seized up. But Finance Minister Guido Mantega said at the time he announced the measures that auto makers had made a commitment to not lay off any employees until the end of the tax stimulus, set to expire at the end of August.
GM’s press office told Dow Jones Newswires that because this is a voluntary layoff program, it doesn’t consider it to be a violation of that agreement.
So far this year, vehicle output is down 9.5% from the same time last year, with 1.28 million cars, trucks and buses produced through May 2012.
May exports fell on the year for the first time since November 2009 as weak global growth erodes demand.
“The [international] market just isn’t buying,” Anfavea President Cledorvino Belini said.