Ford to halt production at Brazil plant for 1 month

Dow Jones Newswires (São Paulo) - Ford Motor Co. (F) has suspended yet another unit in Brazil, trimming production of 30,000 cars in Bahia state, the latest in a series of production halts as stocks build up at dealerships across the country.

Local press in Brazil reported the company will shut down its factory in Camacari, in Bahia state, for one month, starting Sept. 12. The 11,000 workers will be placed on "collective holidays" until Oct. 10, according to the reports.

Ford's press department in Brazil wasn't available for comment on Tuesday.

Car production and sales have hit new records in Brazil in recent years, amid strong economic growth, falling unemployment, higher salaries and readily available credit.

But economic growth in Brazil is now slowing, and car sales have been further hurt by limits imposed by the central bank on auto loans. The central bank said it was concerned about the rapid growth and easy availability of auto loans.

Last week, the president of auto dealer association Fenabrave, Sergio Reze, said inventories at auto dealerships grew to the equivalent of 40 days of sales in August, almost double the 21 to 22 days of stockpiles that is "comfortable." Sales of cars totaled 236,921 units in August, down 0.4% from August 2010.

"I wouldn't say it's an unacceptable level, but it is a difficult level," he said, noting that for auto dealers, the cost of maintaining those elevated inventories of cars is "at the limit."

According to the national association of auto financing companies, Anef, total auto loans outstanding reached 196.2 billion reais ($119.2 billion) in July, up 14.6% from a year ago. However, the growth rate between 2009 and 2010 had been 18.1%.

Anef said that, because of the central bank's steps, credit will continue to slow for the rest of the year, and it expects the overall stock of auto loans to grow 10% in 2011 from 2010.

Meanwhile, auto makers continue to suspend production.

According to the press reports, Ford has already said it will suspend production at a factory in Taubate, in Sao Paulo state, for 10 days, and at its unit in Sao Bernardo do Campo, also in Sao Paulo state, production of trucks and cars will also be suspended.

On Monday, Volkswagen AG (VOW.XE, VLKAY) suspended production of cars at its Sao Jose dos Pinhais factory for one week, according to the Estado de S Paulo newspaper.

Italy's Fiat SpA (F.MI) put some of the workers at its plant in Betim, Minas Gerais state, on leave for several days, while General Motors Co. (GM) has also temporarily cut back production at its Sao Jose dos Campos unit in Sao Paulo.