May 8, 2020 / 5:25 PM / 19 days ago

Coronavirus sends Mexico, Brazil auto output into deep swoon

SAO PAULO/MEXICO CITY, May 8 (Reuters) - 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 units.

In normal times, Mexico and Brazil produce over half a million cars a month combined. The industry represents scores of jobs and several percentage points of their respective country’s GDPs.

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

Mexico and Brazil are key bases for global automakers, including General Motors Co, Ford Motor Co, Volkswagen AG and Fiat Chrysler.

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

Brazil is more focused on its domestic market but is a significant exporter to 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.

In Brazil, the coronavirus pandemic is deepening a years-long crisis from which the industry was already struggling to recover.

Brazil has the capacity to produce more than 400,000 cars per month, due to expensive bets made just before the country underwent its worst economic crisis on record in 2016.

The coronavirus crisis may well exceed the damages caused then, from which the auto industry never fully recovered.

Reporting by Marcelo Rochabrun in Sao Paulo and Anthony Esposito in Mexico City; Editing by Dan Grebler

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