General Motors Co. (GM) and PSA Peugeot Citroen are evaluating a joint investment totaling 1 billion euros ($1.28 billion) to build a factory in Brazil by the end of this month, Veja magazine reported without citing any source.
The companies will decided on the investment by the end of this month and the factory may be built in Minas Gerais or Rio de Janeiro state the magazine reports.
Brazilian vehicle sales fell the most in more than a year in April, as default rates rose on auto loans, strengthening the government’s case for stimulus measures to boost growth.
Inventories in Brazil’s auto sector amounted to 43 days’ worth of sales last month, according to the national automakers’ association, Anfavea. That was the highest level since November 2008, when stocks reached 56 days of sales.
GM sold 41,381 vehicles in April, an 8 percent drop from March, while Ford sales fell 14 percent to 24,103 autos.
In Europe, both companies are in the red area — By combining efforts around purchasing and logistics, and eventually building cars on shared vehicle platforms starting in 2016, they hope to drive down costs.
While many analysts questioned the benefits of the alliance to GM, the U.S. automaker sees the partnership as a way to help reverse years of losses at its Opel unit in Europe.