The ongoing credit crisis has General Motors Corp. (GM) in Brazil sending 1,633 temporary workers home before their work contracts expire, the company said in a press release Wednesday.

The local subsidiary of the U.S. automaker said that low expectations for car sales in the first half of 2009 led the company to put the temporary workers on paid leave until their temporary contracts expire. For some workers, that means their GM paychecks could end as early as this month, a GM spokesman said Wednesday.

In Sao Paulo, over 12,000 metalworkers from the automotive industry took to the streets in protest of sector-wide layoffs as the global credit crisis hits home.

Brazil's record breaking auto sales began to slow in October once banks increased lending rates and shortened payment terms, causing companies to rethink production levels as cars sit unsold on dealers' lots nationwide.

Protesting autoworkers are calling on the government to make aggressive cuts to interest rates Wednesday in order to spur consumer demand for new cars.

The monetary policy committee, Copom, will decide on interest rates after market hours on Wednesday. Market expectations are for rates to fall to 13% from the current 13.75%, making them one of the highest interest rates in the world.

GM said it has not laid off any full time staff employees.

The company said that if sales return, then GM would reevaluate the temporary workers agreement. For now, the autoworkers will lose their jobs at GM once their respective temporary work contracts expire over the next several weeks.

Brazil is one of the most important auto markets for GM and other international automakers. However, sales have been declining along with those in the U.S. and Europe as the credit crisis impacts the real economy, causing layoffs across many sectors in Brazil.

Over 650,000 jobs were lost in Brazil in December, nearly half the number of jobs created in all of 2008, the Labor Ministry reported Monday.

-By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com

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