March 13, 2014 1:10 p.m.
RIO DE JANEIRO—Car maker General Motors expects its vehicle sales in Brazil to remain stable in 2014 from last year, a company executive said Thursday, as slowing economic growth puts the brakes on the local auto industry.
GM expects to sell around 650,000 units in Brazil this year, Jaime Ardila, president of General Motors’ South America operations, said in an interview. The company’s sales last year rose about 1.1% to 649,814 light vehicles, according to Brazilian auto-industry association Anfavea.
Brazil, the fourth-biggest market for new cars, saw sales decline last year for the first time in a decade, to 3.77 million vehicles from a record 3.8 million in 2012. Industry officials expect higher taxes on new-car purchases and events such as the monthlong soccer World Cup in June and July, and presidential election in October, to keep a lid on growth this year.
Mr. Ardila, however, said General Motors isn’t too worried about the economic situation.
“I think there’s a negative perception about the Brazilian economy that’s out of line with the reality,” he said, adding that General Motors has no plans to revise its investment program in the South American country.
But a concern is the possibility of water rationing due to an ongoing drought that has left reservoir levels precariously low, in a nation that depends heavily on hydroelectric power.
The problem is particularly acute in São Paulo state, where half of General Motors’ Brazilian production is located. Meteorologists say the state hasn’t had a dry spell this bad in 40 years.
“Although the state government says it isn’t considering rationing, the question worries us because there has never been a shortage of water,” Mr. Ardila said, noting that painting new cars is water-intensive. “So there’s no plan B on our end, and I can’t say what impacts there would be if there were a shortage, since it has never happened.”