General Motors Co averted a looming strike in Brazil by delaying the layoff of as many as 750 workers until the end of the year and vowing to invest about 500 million reais ($246 million) at its Sao Jose dos Campos facility.
The accord, reached late on Saturday with leaders of the Sao Jose dos Campos' metalworkers union delays GM's politically sensitive efforts to shut down what it calls an uncompetitive assembly line in that city.
The Sindimetal-SJC union said on its website that the workers are members of the production line for the Classic model. Spokespeople at GM were not immediately available to comment.
Since last year, GM has faced pressure from President Dilma Rousseff to retain workers in exchange for tax breaks that helped lift sales in the world's fourth-largest car market to a record high last year.
Still, auto production in Brazil's auto industry fell for the first time in a decade and productivity plunged to a six-year low, as rising wages, transportation bottlenecks and rigid labor laws eroded the competitiveness of local factories.
GM's standoff with the union is one of the highest-profile labor conflicts in Brazil, where a tight job market has forced companies to concede steep wage increases. Unemployment has fallen to record lows despite two years of disappointing economic growth, helping to shore up the popularity of President Rousseff and her leftist Worker's Party.
GM's complex in Sao Jose dos Campos, near the city of Sao Paulo, produces the Chevrolet Classic at the assembly line in question, as well as the Blazer, S10 pickup, engines and transmissions on other lines, employing more than 7,000 workers.
Workers will vote the accord on Monday, the union said.
(Reporting by Brad Haynes and Guillermo Parra-Bernal; Editing by Maureen Bavdek)