SAO PAULO - Although economists predict that Brazil's GNP will improve by 3 to 5 percent this year, the auto industry continues to suffer.
In February, production in Brazil was down 26 percent to 103,284 cars and light commercial vehicles.
Fiat and Ford were the biggest losers, while VW and GM increased sales.
Neighboring Argentina, also a member of the Mercosur free trade market, is also beginning to suffer.
Argentina had record February production of 34,320 units, up 27 percent from last year, but several plants closed at the end of the month.
Peugeot and Fiat each announced temporary closures in Argentina in response to slow Brazilian sales. Fiat's 3,500 Cordoba workers didn't work on Fridays and Saturdays during March.
Brazil's auto manufacturers expect a 4 percent drop in production this year, although Fiat's Marea is now in full production.
With its car market flat, the government of Brazil has signed a new accord with the US government that ties together imports and exports. Manufacturers and suppliers will be able to import $1.02 worth of cars, components and tooling for every $1 exported.
Manufacturers have until 30 June to join the new regime, while suppliers must join by 31 December.