Volkswagen postpones work suspension in SP, says union – 05/11/2023 – Market

Volkswagen has decided to postpone a scheme to suspend the employment contracts of around 800 workers at its vehicle factory in Taubaté (SP), said the local union, citing as a reason expectations around a possible program by the federal government to encourage production. cheapest vehicles in the country.

In May, Volkswagen even communicated to the Metallurgists Union of Taubaté and Region that around 800 workers at the Taubaté factory would be placed in the so-called layoff scheme for up to five months.

Sought by Reuters, the company did not respond until the publication of this text.

According to the union, the union movement and Anfavea (association of automakers) have discussed with the federal government the issue of the popular car.

“Given the progress of these discussions, Volks is postponing the start of the layoff to July 1”, said the entity’s president, Claudio Batista, in a press release. “It is a discussion that involves taxation and other issues to leverage the sector,” he added.

The layoff date may still undergo other changes depending on the progress of the sector’s discussions with the government.

Currently, the cheapest cars produced in the country are the Mobi and C3 Live, by Stellantis, and the Kwid, by Renault, but prices start at around R$70,000.

The country’s automotive industry turned in the 1990s to so-called “popular cars” amid government incentives. However, vehicles lacked a series of safety and comfort items now incorporated by the industry, such as airbags, partly due to obligations introduced by legislation in recent years and partly due to demand.

In recent years, the national industry has practically turned to the production of more expensive models such as sport utility vehicles and medium and large pickup trucks, which are more profitable at a time when their headquarters are investing billions of dollars in electrification projects in Europe and the United States.

At the end of March, the chief executive of Stellantis for South America, Antonio Filosa, stated that it is possible to reduce vehicle prices in Brazil, but for that to happen it is necessary to dialogue with the government on issues that include the tax burden and access to cheaper credit, something that has been hampered by the Central Bank keeping the Selic rate at 13.75% per annum.