Brazil sees June auto production in free fall, the worst performance in six years image

Automotive output in Brazil plummeted last month to the lowest mark since January 2009, with more jobs in the industry now at risk as the country has seen a major auto industry crisis spurred by the fragile economy.

Manufacturing levels of cars, trucks and buses slid 12.5 percent and sales slipped 0.1 percent in June from May even though last month had a couple of extra selling days compared to last year, according to the national automakers’ association Anfavea. Comparing the same working days to June last year, auto production plunged 14.8 percent and deliveries dropped 19.4 percent. The economy has been hit by increased interest rates and inflation, so automakers see no sign of turnaround – their usual option is to limit losses by dropping their payroll ranks, which have already been trimmed by 8 percent over the past 12 months. Brazil has been counted as one of the five major global auto markets and serves as a major production hub for Fiat Chrysler Automobiles NV, Volkswagen AG, General Motors Co and Ford Motor Co.

According to Anfavea, auto production last month tallied around 184,000 new cars and trucks, the slowest level since around 180,000 vehicles in January 2009, which was immediately in the fallout of the global economic crisis. Brazil’s carmakers have also struggled to sell their products amid the unpopular austerity measures by President Dilma Rousseff, who opted to drop the traditional tax incentives this year. Anfavea President Luiz Moan said that inventories have surged to almost 340,000 vehicles, so automakers will be lowering production levels through the end of August.

Via Reuters