Volkswagen Halts Production at All Its Factories in Brazil Despite Government Incentive Program

Volkswagen Multinational Announces Halt of Most of Its Factories. Despite the Government’s Incentive of R$ 60 Million, VW Highlights That Sales Are “Stagnant”.

Despite the incentive measures focused on new car sales, Volkswagen decided to halt the production of automobiles in all of its factories in Brazil throughout this week. Only the VW engine unit in São Carlos (SP) continues to operate.

In a statement, the automaker claims that the stagnation of the automotive market was a motivating factor in the decision to stop its factories in São Bernardo do Campo (SP), São José dos Pinhais (PR), and Taubaté (SP).

Volkswagen Requests R$ 60 Million from the Federal Government

Of the total R$ 500 million released by the federal government to sponsor discounts on new car sales, R$ 60 million was requested by Volkswagen in the last three weeks. However, activity at dealerships may have contributed only to the consumption of VW’s inventories, while sales to fleet operators and rental companies have stopped.

Almost 90% of the amount released by the government had already been consumed by automakers by the beginning of the week, with only starting July 6 that companies will be able to purchase cars at a discount.

One sign of this is that one shift at the Volkswagen factory in São José dos Pinhais, responsible for producing the T-Cross, went into lay-off on June 5 and may remain halted for two to five months.

From last Monday (19) until the next day 30, the second shift will also be halted in an hour bank regime. In early May, Volkswagen had already announced that production of the Polo Track at the Taubaté Factory would be reduced to just one shift starting June 1, also for a period of two to five months. Now, its two production shifts are interrupted until June 30, with employees also consuming hour bank.

Chevrolet Also Announces Layoff

At the VW factory in São Bernardo do Campo (SP), which produces the Polo, Nivus, Virtus, and Saveiro, the halt will begin on July 10, when its two shifts will enter a collective vacation for 10 days.

After VW announced the halt, Chevrolet also announced a layoff. The automaker will reduce production at the factory in São José dos Campos, São Paulo, where Trailblazer and S10 will be produced. To this end, the company and the Metalworkers’ Union of São José dos Campos approved a ten-month layoff.

According to the union, the layoff could affect 1,200 workers at the plant, lasting up to 10 months, starting July 3. The company will suspend the second shift of production, meaning the unit will operate on a single shift. Thus, similar to the halts at Volkswagen, the reduction of shifts at Chevrolet has a crisis in the automotive market as a backdrop.

Government Expands Incentive Program for Car Purchases

According to the Ministry of Finance this Wednesday (28), with resources nearing the end, the vehicle purchase incentive program will be extended, with the discount available to purchasing companies. The ministry confirmed information conveyed by Minister Fernando Haddad to journalist Miriam Leitão. Although the program only went live on the night of this Wednesday, the journalist announced the news online.

In the conversation, Haddad stated that the demand for cheaper and less polluting cars surprised both automakers and the government, nearly exhausting the available resources for the program. According to the minister, a new line of subsidies will be launched and announced soon.

Originally, the possibility for companies, such as car rental agencies, to join the car purchase program was set to end on the last day of the 20th; however, exclusivity for individuals to benefit from discounts was extended for two weeks.