Volkswagen halts car production in Brazil

Volkswagen has announced a temporary suspension of car production at its plants in Brazil, citing "market stagnation" as the underlying reason.

The production stoppage aligns with a collective agreement signed between Volkswagen's union and workers, the company confirmed.

Since June 5, the São José dos Pinhais plant in Paraná state, where the T-Cross is manufactured, has implemented a layoff shift, expected to last from 2 to 5 months. Meanwhile, the other shift at the same facility has been on suspension since Monday (Jun. 26) and will remain inactive until Friday (30), utilizing a time bank system.

Similarly, the Taubaté plant in São Paulo state, responsible for producing the Polo Track and the New Polo, has paused both of its production shifts since June 26, also utilizing a time bank arrangement. This suspension will continue until Friday (30).

In São Bernardo do Campo, also in São Paulo, the Anchieta plant, where the New Virtus, New Polo, Nivus, and Saveiro models are manufactured, is scheduled for a collective vacation lasting ten days in both production shifts, starting on July 10.

Government Incentive

Despite the launch of a federal government incentive program for the automotive industry on July 6, which offers temporary discounts for car, bus, and truck purchases, Volkswagen's decision to suspend production stands.

Experts interviewed by Agência Brasil expressed doubts about the program's expected impact on the industry, highlighting the limited duration and resources allocated to the aid program, suggesting it may have minimal effect on the sector's situation.

Gilberto Braga, an economics professor at Ibmec University, praised the incentive program but raised concerns about its four-month duration and the allocated amount of BRL 1.5 billion, which he considered insufficient. According to Braga, while the package is a step in the right direction, it would need to be expanded to achieve a lasting impact on the automotive industry.