GM Seeks Tax Breaks on Money-Losing Plants in Brazil

January 23, 2019 at 12:00 AM

General Motors Co. is close to a deal on government tax incentives that will help its Brazilian plants in the state of Sao Paulo end years of operating losses, Reuters reports.

GM operates two factories in the region. The facility at Sao Jose dos Campos makes Chevrolet Blazer SUVs and S10 compact pickup trucks. The plant at Sao Caetano do Sul builds the Cobalt small car; Onix subcompact car; Spin mini-MPV and Montana front-wheel-drive, light-duty pickup truck.

GM says both facilities continue to experience “unacceptable losses” in spite of slashing their breakeven point 40%. CEO Mary Barra told investor last week that the company is determined to “generate acceptable returns in the near term or to consider other options.”

Sao Paulo is eager to keep both plants, Reuters says. But Economy Minister Paulo Guedes, who represents a new government installed this month, also says Brazil can’t afford continuous subsidies for major industries. He argues that the Brazilian economy will become more competitive if government ends protectionist policies, according to Reuters.