Volkswagen’s Brazilian arm is to slash nearly 4,000 jobs as part of measures to counter the weak car market in Brazil and its key export markets, the firm said late on Sunday, according to Reuters.

Citing a VW statement, Reuters said some 3,933 jobs would go at the company’s Taubate and Anchieta plants — around 16% of a Brazilian workforce of 25,000.

“The difficult situation on the Brazilian market forces us to make significant cuts,” Peter Hartz, a VW board member and supervisory board chief of VW’s Brazilian operation, said, according to Reuters.

VW said it aimed to place the majority of the affected employees at other VW plants or in new jobs and that it was developing a new range of cars, pick-up trucks and light trucks over the next four years for the Brazilian market, Reuters reported.

The news agency noted that car makers invested in Brazil several years ago when the market was growing fast but an economic slowdown in Latin America’s largest economy has hit VW as well as rivals General Motors, Fiat and Renault.

Demand for cars there has dropped as high interest rates have made credit expensive, denting Brazilians’ purchasing power. Analysts say the Brazilian market is down nearly 10% so far this year, Reuters added.

“The weakness in the South American markets is obviously continuing — any hopes of an improvment look to have been dashed,” Metzler Bank auto analyst Juergen Pieper told Reuters.

The cuts also come ahead of second-quarter results on Friday which could see operating profit halve to 730 million euros from a year ago, according to a Reuters poll.