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Last Updated: Monday, 21 July, 2003, 08:59 GMT 09:59 UK
Volkswagen cuts Brazilian jobs
German car maker Volkswagen is to cut nearly 4,000 jobs from its Brazilian arm, to counter weak sales in Brazil and other key export markets.

The company said about 3,933 jobs would go from its Taubate and Anchieta plants - about 16% of its Brazilian workforce.

"The difficult situation on the Brazilian market forces us to make significant cuts," said Peter Hartz, chief VW's Brazilian supervisory board.

Last month, the motor group said it was cutting 2,000 jobs in Mexico due to weak sales of its once iconic Beetle model.

Recovery ahead?

Volkswagen insisted it would try to relocate employees axed in its latest job cull.

"We are confident that we will be able to place the majority of the affected employees at other VW plants or in new jobs," said Mr Hartz.

VW's Brazilian arm has a 23% share of the market in Brazil.

But the economic slowdown in the area, Latin America's largest economy, due to higher interest rates has hit customer spending hard.

A number of other car makers, including Renault and General Motors, have been forced to halt production in Brazil due to weak demand.

Volkswagen said it was confident sales would pick up and that it was developing a new range of cars and trucks over the next four years.

International problems

Such new model launches are long overdue, analysts insisted, and as such Volkswagen's difficulties are international.

"It is currently hit with the end-of-model-cycle for its main high volume products, Golf and Polo," Autopolis auto analyst Kim Rennick told BBC World Business Report.

"Those products tend to be losing market share to competitors."

Volkswagen has experienced delays in bringing replacement models to market, Mr Rennick said.

"They need to hurry along their new products," he insisted.

Autopolis auto analyst Kim Rennick
"Volkswagen's problems in Brazil are due to both local factors and global factors"

Autopolis car industry analyst Kim Rennick
Volkswagen's problems in Brazil are due to both local and global factors

Beetle-maker lays off 2,000 staff
30 Jun 03  |  Business
End of the road for the Beetle
06 Jun 03  |  Business
Profits fall at Volkswagen
19 Feb 03  |  Business
Volkswagen recalls 850,000 cars
04 Feb 03  |  Business
Car makers warn of tough times
21 Jun 02  |  Business

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