March 6, 2020 / 4:02 PM / a month ago

Brazil auto production may stop in April as coronavirus hits parts supplies

SAO PAULO (Reuters) - Brazil carmakers might have to suspend production in April due to a lack of parts from China, where the coronavirus outbreak has hit suppliers and affected global trade, automakers’ association Anfavea said on Friday.

“Is there a risk of stopping production in April? There is,” Anfavea’s president Luiz Carlos Moraes told reporters, saying all automakers are monitoring the situation. China is Brazil’s main supplier of foreign auto parts, accounting for 32% of all imported parts, Moraes said.

The world’s automakers are scrambling to sort out their supply chains in light of the new virus. Brazil has been hit with additional trouble: its currency, the Real BRBY has depreciated around 15% so far this year, making imports significantly more expensive.

“If (the real) remains weak, that will mean an additional cost of 8 billion reais ($1.72 billion)” in 2020, Moraes said. He said this would amount to about 2,600 reais per car.

Moraes said in February that automakers in Brazil had Chinese autoparts in stock to last three to four months. But on Friday he made the first clear indication that at least some carmakers could run into problems as early as April.

Moraes, a Mercedes Benz executive, said carmakers were evaluating alternatives such as bringing in Chinese autoparts by plane rather than ship.

Other alternatives include for automakers to shift production to focus on cars that do not need as many Chinese parts. He did not elaborate on individual brand decisions.

Reporting by Marcelo Rochabrun; Editing by Chizu Nomiyama and David Gregorio

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