Automotive industry collapses in Mexico

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MEXICO CITY – Auto production in Mexico and Brazil, Latin America’s top producers, plunged by an unprecedented 99% in April as a result of the coronavirus crisis, with the two countries building a total of just 5,569 vehicles.

In normal times, Mexico and Brazil produce over half a million cars a month combined. The industry accounts for hundreds of thousands of jobs and several percentage points of their respective countries’ gross domestic products.

“The situation is difficult and dramatic,” Luiz Carlos Moraes, president of Brazil’s automakers’ association, told reporters.

The statements on production, made on Friday by Mexico’s Inegi statistics association and Brazil’s Anfavea automakers association, are the first available window into the sheer extent of the crisis for automakers in Latin America.

The coronavirus pandemic is putting jobs in peril and raising questions about the sustainability of the industry’s international supply chains, much of which go back to China. The poor results may also be used by auto executives to obtain government aid.

Both countries have so far avoided layoffs but much hinges on when production can restart and whether there will be any demand for cars once that happens. Mexico could tentatively restart production on May 18, while Brazil’s top automakers are eyeing a June restart.

Industry sources say the restart date in Mexico will ultimately depend on President Andres Manuel Lopez Obrador giving the green light.

Mexico and Brazil are key bases for global automakers, including General Motors Co <GM.N>, Ford Motor Co <F.N>, Volkswagen AG <VOWG_p.DE> and Fiat Chrysler <FCHA.MI>.

Employees work at a wire harness and cable assembly manufacturing company that exports to the U.S. in Ciudad Juarez, Mexico, April 27, 2017. Picture taken April 27, 2017. REUTERS/Jose Luis Gonzalez – RC199476D6D0

April shipments from Mexico, which is more dependent on exports to the United States, fell by 90% compared with March to just 27,889 vehicles, Mexico’s Inegi said.

Brazil is more focused on its domestic market but is a significant exporter of Argentina. Exports fell by 77%, Anfavea said, to 7,200 units.

Sales overall plummeted by two-thirds in Brazil to 55,700 units. Mexico did not disclose sales numbers.

Source: Reuters

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