By Rogerio Jelmayer
SÃO PAULO -- General Motors Co. expects Brazil's auto market to recover next year from a deep slump, allowing the company to avoid layoffs in Latin America's largest economy, the local unit's top executive said on Tuesday.
The recovery will pick up in the second half of next year, and vehicle sales will go up to 2.4 million from this year's estimated 2.1 million, General Motors do Brasil's President Carlos Zarlenga said to reporters on the sidelines of the São Paulo auto show, which opened Tuesday.
In 2014, Brazil's auto makers produced 3 million units, an all-time high for the country.
Last year, GM said it would invest 13 billion reais ($4 billion) in Brazil between 2014 and 2019, as part of the U.S. auto maker's effort to expand sales in emerging markets.
The amount is twice as big as GM's previous plan, which called for a 6.5 billion reais investment between 2014 and 2018.
GM operates six plants in Brazil; three to assemble vehicles and three to manufacture auto parts. It sells 13 models in the country, including passenger cars and SUVs. The company has a total of 16,000 employees in Brazil.
In the first 10 months of this year, GM sold a total of 243,829 passenger cars in Brazil, down 9.7% from the year-ago period, according to the national association of auto makers, known as Anfavea.
A combination of recession, unemployment and high borrowing costs is depressing car sales. Brazil's economy contracted 3.8% last year and is forecast by economists to shrink around 3.2% this year, while unemployment is at 11%, up from 4.8% in 2014. The average interest rate in an auto loan is 26%, according to the central bank.
Brazil's auto industry sold 1.67 million cars, light vehicles, trucks and buses this year through October, a 22.3% drop from the same period in 2015, according to Anfavea.
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(END) Dow Jones Newswires
November 08, 2016 06:59 ET (11:59 GMT)
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