SAO PAULO, Jan 23 (Reuters) - The governor of Brazil’s Sao Paulo state said additional tax breaks may be extended to all automakers operating in the state, newspaper Valor Economico reported on Wednesday, suggesting that pressure from General Motors Co could benefit rivals too.
GM warned its employees in Brazil last week of “sacrifices” that would be necessary for the company to return to profit in the South American nation, raising concerns about layoffs or shuttered assembly lines. On Tuesday, the carmaker told public officials and unions it was in talks with Sao Paulo state about tax incentives.
“Any support given to GM will be offered to the broader auto industry in all of Sao Paulo,” Sao Paulo Governor Joao Doria told Valor at the World Economic Forum in Davos, Switzerland.
Representatives for the state government did not immediately respond to a request for comment.
Brazil’s second-largest seller of cars and light trucks, Fiat Chrysler Automobiles NV, does not have plants in Sao Paulo state, but Volkswagen AG, the third-largest in the country, has three.
Last year, Brazil’s federal government granted carmakers a 15-year package of tax breaks – extending subsidies for an industry that has struggled to compete directly with production elsewhere.
Economy Minister Paulo Guedes, who took office as part of a new business-friendly federal government this month, has said Brazil cannot afford to keep subsidizing powerful industries, arguing that an end to protectionist policies will make the economy more competitive. (Writing by Marcelo Rochabrun Editing by Paul Simao)