GM, Fiat to Cut Vehicle Output in Brazil in October, November

By Heloiza Canassa

Oct. 4 (Bloomberg) -- General Motors Corp. and Fiat Spa's Brazilian units will cut vehicle output in the country in October and November after asking some workers to take vacations early.

GM asked workers at three of its plants in Sao Paulo state to take time off beginning this month, Carlos Augusto Souza, a company's spokesman, said, without giving details. About 1,700 of Fiat's 15,000 workers at a Betim plant will take at least 10 days of vacation, Guilherme Pena, a spokesman for Fiat do Brasil, said in a telephone interview from Sao Paulo.

Automakers are cutting production after four central bank interest rates increases pushed car-loan costs higher and sapped demand. Auto registrations rose 4 percent to 244,800 units in August, the slowest pace in two years, according to Brazil's Automakers Association. That compares to a 33 percent increase in July.

``We are reducing output now to maintain production throughout the year,'' Pena said. ``Nobody estimates sales will plunge.''

Fiat says the decision will lead to a 10 percent decrease in the company's daily production of 3,000 units.

Automakers in Brazil historically shut plants during the year-end holidays, Pena said. Fiat last year maintained about a third of production during holidays.

Fiat, Brazil's largest automaker, has 26 percent of the country's vehicle market, according to the association, known as Anfavea. The company sold 394,400 units through August. GM is the country's third-largest automaker, with a 22 percent market share.

To contact the reporter on this story: Heloiza Canassa in Sao Paulo at hcanassa@bloomberg.net