Plant closures in Brazil likely to cause only short-term impact on South American production

In February 2021, IHS Markit forecasted that the total truck
production volumes for South America region will touch 109,000
units in CY 2021 out of which, manufacturers in Brazil are expected
to produce 103,000 trucks. Within last few days, major truck
manufacturers in Brazil have made announcements to temporarily
cease operations in their truck manufacturing plants citing two
major reasons: increasing number of COVID-19 cases in the country
and a lack of semiconductor parts used in the manufacturing of
vehicles.

Major OEMs including Volvo, Scania, Mercedes Benz, and
Volkswagen are either shutting down their plants or reducing
production in Brazil starting from this week in March until the end
of the first week in April 2021. Volvo will reduce production of
trucks at the Curitiba plant by 70% from the March 23-31. Scania,
on the other hand will cease production in São Bernardo do Campo
plant, starting on March 26 and resume activities on April 5.
Volkswagen Trucks will most likely keep its plant closed from March
29 – April 7 for the holidays in the state of Rio de Janeiro in
Brazil. Mercedes Benz on the other hand will suspend activities in
its Brazilian plants from March 26-April 5 citing the same reason
as Scania. Other major players have not yet announced any plant
closures, however, will most likely join the trend.

Keeping the above-mentioned reasons mind, IHS Markit expects a
combined loss of 3,100 to 3,400 truck units in production across
all major OEMs in Brazil for the said closure of plants (from March
23/24 until April 5). This is however, not expected to impact the
total forecasted production volumes figures for CY 2021 as we
anticipate the manufacturers to pick up pace and recover these lost
productions in the second half of this year. The boost in
production will be fueled by increased demand for heavy trucks from
agribusiness and expected recovery in exports to other countries
from Brazil. Do note that the current loss in production volumes
are based off information we have and might change if the OEMs
increase the span of plant closures further or continue to reduce
production lines rates because of either COVID-19 or shortage of
semiconductor parts.

– Kushagra Bahukhandi, Automotive Analyst, IHS Markit

Source: http://ihsmarkit.com/research-analysis/plant-closures-in-brazil-likely-to-cause-short-term-impact.html