General Motors (GM) Cautions Workers In Brazil On Losses
Zacks Investment Research | Jan 20, 2019 08:44PM ET
General Motors Company (NYSE:GM) cautioned employees in Brazil about losses and informed that this situation requires a tough turnaround plan, per Reuters. The company is encountering challenges in South America which makes it imprudent to deploy capital at this moment. However, if this leads to shutdown or halt in production in the continent, it will have serious consequences on the company’s employees.
In South America, the conditions in Brazil are improving since the 2015-16 recession. However, Argentina had been fighting due to a recession in 2018, with surging inflation and declining peso. Meanwhile, investors are keeping an eye on how economic reforms will change things in these key South American countries.
Notably, the government of Brazil extended subsidy to the auto industry, which has for long struggled to keep up with production in other regions. In sync with this, a 15-year tax break package was offered to automakers in 2018. However, per experts, Brazil cannot continue to offer subsidies to the key industries as it believes that the abolishment of protectionist policies will lead to more competitiveness. However, given the losses in South America, General Motors needs to devise a tough turnaround plan.
Over the past year, shares of General Motors have outperformed the Original post
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