Automakers reduce production and take collective vacations to avoid high inventory – 03/20/2023 – Market

More automakers announced the decision to grant collective vacations in their plants to contain the growth of stock amid irregularity in the supply of components.

After GM, which will be stopped for 17 days in São José dos Campos (SP), Hyundai will have 13 days of vacation, in Piracicaba (SP), and Volkswagen, ten days, in Taubaté (SP).

In Goiana (PE), Stellantis (owner of Fiat, Jeep, Peugeout and Citröen) will take a first break from this Wednesday (22nd) for just one of the factory’s three shifts. This collective vacation period runs until April 10th. Between March 27th and April 6th, however, all shifts will be paralyzed.

The pause in Hyundai’s production in the interior of São Paulo started this Monday (20th) and runs until April 2nd. The stoppage affects the three vehicle production shifts and administrative teams, reaching around 2,000 employees.

At the engine factory, also operating in the Piracicaba complex, there will be no vacations, according to the company. Hyundai says that the collective vacations were necessary to adapt production volumes and avoid the formation of inventories. The company said, in a note, to be “following the dynamics of the internal vehicle market for the first quarter of the year”.

In Taubaté, Volkswagen will grant vacations from the 27th. According to the automaker, until April 5th there will be maintenance on the production line. The pause will also serve to adapt production in the face of “instability in the component supply chain”, the company said in a note.

According to the Taubaté Metallurgist Union, around 2,000 factory workers will be on vacation during the period.

In Goiana, Stellantis produces three Jeep models (Commander, Compass and Renegade) and the Fiat Toro. The company says that the other factories in Brazil continue to produce. The company justified the need to pause production due to the instability in the supply of components, an argument also used by GM for vacations in São José dos Campos.

The problem, aggravated by the pandemic from 2020 onwards, has led to dozens of breaks at automakers in the last two years, either through collective vacations, lay-offs (a type of temporary suspension of the employment contract) or paid leave.

The credit situation in Brazil, however, concerns companies. In early March, Anfavea (National Association of Automotive Vehicle Manufacturers) already highlighted this as a limitation that worried the sector for growth in 2023, alongside the supply of supplies.

The most recent bulletin from Anef (National Association of Financial Companies of Automakers) shows that defaults by individuals reached, in 2022, the highest rate of recent years, hitting 5.9%. The data refers to payment delays of more than 90 days. Compared to 2021, the increase was 1.5%.

In February, the automakers’ stock reached 38 days, a volume that Anfavea classified as not worrying, but highlighted that brands have been running campaigns to stimulate sales. The high cost of credit was identified as the main barrier to buying a car, showed the Ipsos Drivers study.