Brazilian auto makers are hiring staff once again in response to surging demand, local newspaper O Estado de S. Paulo reported Thursday.

Volkswagen (VLKAY) took on 200 temporary workers last week and is studying taking on 600 or 700 more by the end of the year, according to the report.

Fiat (FIATY) is also considering opening new positions, while General Motors Corp. (GM) has employees working extra Saturdays, according to the report.

Brazilian car makers saw sales drop sharply in the second half of last year, leading to a series of layoffs as stocks rose.

However, sales recovered quickly from December when the government lifted industrial production tax on autos. The tax break was extended to Oct. 31 this week.

On Wednesday, GM said it registered the highest single month car sales in history in June.

-By Alastair Stewart; Dow Jones Newswires; 5511 2847-4520; alastair.stewart@dowjones.com