General Motors' Brazil Car Sales Seen Lower For Feb-Source

General Motors Corp. (GM) will likely sell fewer cars in February in Brazil, putting an end to a two-month sales rally, a source within the company said.

General Motors do Brasil Ltda., the local subsidiary of the ailing Detroit automaker, sold 38,157 vehicles in January. In February, with just Friday and Saturday left to complete the month, GM sold around 30,000 vehicles, the source told Dow Jones Newswires late Thursday.

GM recently put 900 staff employees on paid leave for a month starting Thursday due to a number of unsold vehicles still sitting at assembly plant lots.

The company also declined to renew contracts with 1,633 temporary workers recently.

Car sales rose slightly in December and again in January for Brazil's "Big Three" automakers -- GM, Volkswagen AG (VOW.XE) and Fiat SpA (FI.MI) -- thanks to a temporary tax break. The industrial IPI tax cut ends on March 31. So far, it has reduced sticker prices of new cars by as much as 7.4%. But with layoffs across various sectors and unemployment now over 8%, locals are holding back from buying costly items.

Banks have also shortened their lending terms for new car financing and have raised interest rates. Defaults on car loans rose to 4.7% of all car loans in circulation in January, a record.

Volkswagen declined to comment on February sales.

Fiat was unavailable for immediate comment.

Industry association Anfavea will release its monthly sales numbers for February on March 9.

-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, [e-mail]