Flooding in Brazil disables automotive supply and production

Heavy rains hit the region at the end of April and continued into May, resulting in more than 160 confirmed fatalities and the worst flooding the country has seen for 80 years. Automotive suppliers remain inoperative and distribution networks continue to be disrupted.

GM’s Gravataí plant makes Chevrolet vehicles in Rio Grande do Sul for Brazil and neighbouring South American markets. The carmaker temporarily halted production of the Chevy Onix to adjust output and reduce inventory levels in the plant’s storage yards between May 2-6. However, the heavy rains and flooding extended the shutdown and there is no date as yet fixed for the return of production.

The Gravataí plant exclusively makes the second-generation Chevy Onix as the hatchback version and Onix Plus sedan. It remains the best-selling vehicle in Brazil.

Volkswagen do Brasil confirmed that rains in Rio Grande do Sul had impacted its factories and the suppliers its uses in the region, which are currently unable to operate. The carmaker’s four plants in Brazil are situated north of the flood hit area in São Paulo and Paraná states but the carmaker has given workers a collective vacation from May 20 at the Anchieta and Taubaté assembly plants, and São Carlos engine plant, because suppliers based in Rio Grande do Sul have been shut down and transport links cut.

“Anchieta and Taubaté may have ten days of collective vacation [while] the São Carlos engine factory may have an 11-day vacation for part of the production team,” said a spokesperson for VW. “São José dos Pinhais plant, at this time, will continue producing normally. Volkswagen do Brasil stands in solidarity with the people of Rio Grande do Sul and reinforces its conviction that the reconstruction of this state will be carried out with the same greatness as the people from there”.

VW do Brasil said it was monitoring parts supply “minute by minute”.

Stellantis facilities in Córdoba, Argentina have also been affected by the floods in Brazil. “The unprecedented impact of the catastrophe has directly affected the logistics system for the transportation and supply of industry components,” said a spokesperson for the carmaker. “Stellantis always prioritises the safety of its employees and suppliers. As a result, the company had to stop production at the Stellantis automotive centres in Córdoba, Argentina, and is still analysing the need for further stoppages at its plants in the region.”

Supply chain linchpin 
The president of Brazil’s National Association of Automobile Manufacturers (Anfavea) highlighted that Rio Grande do Sul is an important link in the automotive industry’s supply chain. Speaking from the recent Beijing Motor Show, as the waters rose in Brazil, he said: “There are thousands of people who work in companies in the automotive segment, impacted by the floods. So, at this moment, we do not calculate the material damage, but we focus on minimising human damage.”

Claudio Sahad, president of Sindipeças, the National Association of Brazilian Auto Parts Manufacturers, who was also attending the Beijing Motor Show, explained that the automotive sector in Brazil had been directly and indirectly impacted. He pointed to Porto Alegre, home to tier supplier factories and service providers for the automotive segment, which has been directly impacted, with many supplier facilities flooded and out of operation.

In the regions of Gravataí and Caxias do Sul, which were not directly affected by the flood, there is nevertheless disruption because transport routes are impassable, he said. Emergency repairs are underway to open up those transport routes and re-establish the supply of parts.

Humanitarian aid
Carmakers have been carrying out humanitarian aid actions on a number of fronts. GM’s social investment organisation in Brazil – General Motors Institute – has raised more than R$1m ($195,000) to help victims of the floods, made up of donations from employees, dealers, suppliers, partners and GM itself.

The amount will be used in three areas: for humanitarian aid through the acquisition of cleaning items, personal hygiene kits and drinking water for distribution in various parts of the state; in the purchase of items to help citizens to return home and volunteering with cleaning and organisation efforts; and in understanding what is needed for the recovery of the Rio Grande do Sul.

‘’GM is acting on several fronts, providing assistance to our employees, their families and the community, using all GM channels to boost donations. We are committed to stimulating a growing support network with increasingly greater impact,’’ said Fabio Rua, vice-president GM South America.

GM is also making Chevrolet vehicles with 4x4 drive available for rescue and general aid operations led by the Red Cross and the state government.

At the same time, Stellantis has sent dormitory and personal hygiene kits, in addition to the transfer of more resources to the victims of the flooding. The new contribution will be allocated to the Red Cross – Caxias Do Sul and Visão Global – that work locally to help people affected by the floods.

Stellantis has also implemented actions to assist dealers affected by the flooding, including extending the deadline for payments for cars and parts. The Parts & Services division will extend deadlines for warranty requests, in addition to simplifying the process of prior authorisations and presentation of documents, said Stellantis. Customers who are unable to drive their vehicles to the dealership will have extended deadlines for carrying out inspections and contractual warranty coverage.