German vehicle manufacturer Mercedes Benz said Wednesday it had cut 500 jobs at its Brazilian plant in Sao Bernardo dos Campos near Sao Paulo and placed 7,000 workers on short-term leave.
A spokesman told AFP the 7,000 jobs were spread across all areas of production and the workers would have to take compulsory leave between June 1 and 15.
The plant employs 10,500 to produce vans and buses. The layoffs come amid a deep slowdown in Brazilian auto and vehicle sales, with the economy in a fifth straight year of low growth with a contraction of around 1.0 percent forecast this year.
The government has reacted to the slowdown by raising interest rates to quell rising inflation, which has made credit for large-ticket purchases such as cars more expensive.
Brazil’s automakers’ association Anfavea said between January and April, vehicle production fell 17.5 percent to 881,770 units and sales dropped by 19.2 percent to 893,630, compared with the same period last year.
Other manufacturers, including Volkswagen, Ford and General Motors, have also had to put workers on leave as they react to sales slide.
Brazil recently slid back to the world’s eighth-largest vehicle producer, having made 3.15 million units last year — a 560,000 drop on 2013.