Brazil’s Car Production Boosted by Tax Breaks image

Auto sales in Brazil, the fourth largest auto market, were revived by the government’s tax breaks.

Brazil’s vehicle production in July saw an increase of 8.8%, as GM agreed to postpone its plan to lay off 1,840 employees. But the government still believes that car makers will still cut jobs even if this means losing the privilege of tax breaks.

The automotive industry, alongside recording increases in sales, must also guarantee there are no lay-offs,” said Guido Mantega, finance minister, commenting on the GM case. “The federal government will be vigilant about ensuring this.”

Monday, August 6th, Anfavea, the automotive industry manufacturers association, announced that in July the number of manufactured cars reached 297,800 units, up 8.8% compared with June. The number of new cars registrations also increased with 3.1% compared to June, or 18.9% year-on-year. From January to July production dropped 8.5% compared to the same period last year, and sales were up 1.8%.

GM agreed to postponed until November its plan to lay off 1,840 employees at the São José dos Campos plant, near São Paulo. After nine hours of negotiations on Saturday, GM agreed to keep 900 workers at the plant until November and the other 940 to be removed from the production line on November 30th, but retrain them for work in other areas.