UPDATE: Furloughed Brazil Autoworkers Return As Sales Rise
February 17 2009 - 11:32AM
Dow Jones News
Thousands of Brazilian auto workers who were put on temporary
leave since sales slumped in November returned to the assembly
lines last month as sales picked up.
"Sales are a lot better in February and continuing the trend
from January's uptick," Gustavo Luis Schmidt, sales director of
Volkswagen AG (VLKAY) Brazil unit, said Tuesday. Volkswagen was
Brazil's market leader in January, followed by Fiat SpA (FIATY) and
General Motors Corp. (GM).
Sales have been better since the start of the year. The first
two weeks in February saw sales rise 15.5% to 109,258 units when
compared to the same two week period in January.
When compared to the first two weeks of February's sales in
2008, Brazil's biggest auto makers sold 7.4% more.
Car sales rose 11.2% to 88,507 units in the first two weeks of
February, while pick-ups and SUV sales rose 37.7% to 20,751
units.
Already, January motor vehicle sales rose 1.5% over December,
the National Motor Vehicles Manufacturers Association, or Anfavea,
said last Monday.
Schmidt attributed the sales increase to a government industrial
tax break at the end of the year, which resulted in sticker-price
declines of as much as 7.4%. The tax break ends March 31.
Production also rose a surprising 92.7% to 186,124 units last
month as auto workers started trickling into work on the assembly
lines of the top three national auto makers.
Fiat, Brazil's No. 1 retail auto leader in 2008, has all of its
15,000 employees working at its one plant in Sao Paulo since early
January.
The plant is producing around 2,600 cars and trucks a day, down
from an average of 3,000 vehicles daily at the height of Brazil's
auto boom in 2008.
Vehicle sales in Brazil rose 14.5% in 2008 to 2.82 million
units, though production rose 8% to 3.2 million vehicles that same
year.
Car sales started declining in October when banks raised
interest rates and shortened the terms of car loan in response to a
fast onrushing global credit crunch.
Brazil's automotive sales declined for three months in a row
before picking up in January. February sales are seen rising on the
month, as well.
Volkswagen has around 21,000 employees currently producing at
its four assembly lines, after giving them much of December
off.
General Motors also has around 22,000 of its workers back to
work. Its motor division is still maintaining a policy of forced
holidays.
GM is currently producing around 2,500 cars and trucks daily, a
press manager said, also lower than 2008's peak.
Brazil has been a shining star for international auto companies
over the last three years. As sales have slipped in Europe and the
U.S., car sales for GM, Volkswagen and Fiat have broken records
year over year, making it an important country for European and
U.S. vehicle makers.
In the U.S., troubled General Motors will present to the public
later Tuesday its 800- to 900-page report explaining how the
company can turn around its operations.
GM in the U.S. has lost more than $70 billion since 2004, for an
average of $17.4 billion in losses yearly for four years ended in
2008.
In Brazil, GM brought in around 9.5 billion Brazilian reals, or
around $4.13 billion, in 2008.
-By Kenneth Rapoza, Dow Jones Newswires; 5511-8812-5961;
kenneth.rapoza@dowjones.com