Brazil's automotive market so far has fallen by a fifth this year, partly the result of a cash-strapped government's decision to curtail incentives meant to help the industry, according to a report by thestreet.com.
Tensions within the industry are rising, as automakers cut production and lay off workers in order to control rising inventories of unsold vehicles.With loans difficult and costly to obtain on top of dismal consumer confidence, shoppers for new vehicles have been scarce, according to the report.
Brazil is one of the five top automotive markets in the world and a major revenue source to global automakers. Dilma Rousseff, the nation's president, last month made an exception to austerity measures in order to extend easier credit to automakers. The top manufacturer, in terms of sales, is Fiat Chrysler Automobiles (FCAU), according to the report.
Officials in the Brazilian auto industry are forecasting an 18-percent fall in vehicle production this year. Jobs for many in the auto-parts industry, which employs 200,000, may be threatened, according to the report.
Rousseff took office in 2011. For a time the Brazilian economy soared. After taking office she pressured the central bank to lower interest rates, cut taxes and imposed price controls on gasoline and electricity.She and her colleagues in the leftist Workers Party have been accused of diverting money from government banks to cover budget shortfalls, according to the report.
Standard & Poor's downgraded Petroleo Brasilero, the country's state-run oil company, to junk status, along with a slew of other state-run companies, following the downgrade to junk status of Brazil's sovereign debt, according to the report.