GM struggles with first Latin American slowdown in a decade

GM struggles with first Latin American slowdown in a decade

By Joe Leahy

General Motors’ Brazilian headquarters in São Caetano do Sul, with its Portuguese colonial style entrance way, opened in 1930 – ironically just as the Great Depression was kicking off.

While conditions today may be less catastrophic, managers at General Motors in São Caetano, Brazil’s Detroit equivalent near São Paulo, are again battling with a sharp deceleration of the largest industry in Latin America’s biggest economy.

Car sales in Brazil shrank last year for the first time in a decade and are expected to fall sharply again this year, leaving what was one of the world’s fastest growing motor markets looking to cut costs and reduce overcapacity, including through temporary lay-offs that could take on a more permanent nature if things do not pick up next year.

“We see temporary lay-offs as an opportunity to protect employees during a volatile environment,” says Santiago Chamorro, president of General Motors do Brasil, in an interview at São Caetano.

GM has already instituted temporary lay-offs in two plants accounting for about 1,750 workers. Under the scheme, government programmes help pay workers’ salaries for a maximum of five months.

Brazil passenger and light commercial vehicle sales

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