The Mercedez Benz logo on the hood and grille of a car Jennifer Polixenni Brankin, Getty Images

Mercedes Cuts 500 Brazilian Jobs, Puts 7,000 on Leave

Growth in the Brazilian economy has slowed for five straight years, with a contraction forecast of about 1% for this year.

SAO PAULO, Brazil — German vehicle manufacturer Mercedes Benz said Wednesday it had cut 500 jobs at its Brazilian plant in Sao Bernardo dos Campos near Sao Paulo and placed 7,000 workers on short-term leave.

A spokesman said the 7,000 jobs were spread across all areas of production and the workers would have to take compulsory leave between June 1 and 15. The plant employs 10,500 to produce vans and buses.

The layoffs come amid a deep slowdown in Brazilian auto and vehicle sales, with the economy in a fifth straight year of low growth, with a contraction of around 1.0% forecast this year.

The government has reacted to the slowdown by raising interest rates to quell rising inflation, which has made credit for large-ticket purchases such as cars more expensive.

Brazil’s automakers’ association Anfavea said that between January and April, vehicle production fell 17.5% to 881,770 units and sales dropped by 19.2% to 893,630, compared with the same period last year.

Other manufacturers, including Volkswagen, Ford and General Motors, have also had to put workers on leave as they react to sales slide.

Brazil recently slid back to the world’s eighth-largest vehicle producer, having made 3.15 million units last year — a drop of 560,000 on 2013.

Copyright Agence France-Presse, 2015

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