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Mercedes Cuts Truck Production in Brazil as Vehicle Demand Falls

Daimler AG’s Mercedes-Benz, Brazil’s second-biggest truck and bus manufacturer by market share, will take 1,500 workers off assembly lines in Brazil for five months to lower production as demand drops.

The employees from the German automaker’s factory in Sao Bernardo do Campo will receive additional training during the period, the Stuttgart-based company said today. Daimler employs about 14,000 workers in Brazil, where it controls 25.5 percent of the truck and bus market, according to data from the country’s dealer association, known as Fenabrave.

Declines in truck and bus sales “created the need to reduce production,” Mercedes said in an e-mailed statement.

Truck and bus sales fell 28 percent in the first two weeks of May from a year earlier, according to Fenabrave. Brazil’s Finance Minister Guido Mantega last week announced stimulus measures to help boost vehicle purchases. Mercedes and Volvo AB planned to halt production temporarily to cope with dropping sales, according to a report in O Estado de S. Paulo.

Truck makers were facing “difficulties” in selling vehicles and more credit was needed, Cledorvino Belini, president of Brazilian association of vehicle manufacturers, said after a May 14 meeting with Mantega. Truck supply stood at about 50 days worth of sales, a level he said was “worrisome.”

The 1,500 workers will keep their permanent contracts during the training assignments and will continue to be paid, Uta Leitner, a spokesman for the automaker in Stuttgart said today by phone. The company hopes the workers can return to the production lines in the course of the year, she said.

The Sao Bernardo do Campo plant manufactures Mercedes trucks and buses as well as engines, axles and transmissions for sale in Latin America.

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