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Old 01-28-2003, 06:59   #1 (permalink)
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Ford expects to boost exports from Brazil

By Michael Smith / Bloomberg News

SAO BERNARDO DO CAMPO, Brazil -- Ford Motor Co. aims to boost car exports from Brazil by as much as 20 percent this year and reverse eight years of losses in South America, the company's regional president said Tuesday.

Ford is pinning its plans on a re-designed Fiesta subcompact and the new, EcoSport sport utility vehicle made at a $1.9 billion plant in Brazil's Bahia state, said Richard Canny, Ford's president in South America. Last year, Ford sold $100 million of Fiestas outside Brazil from the Bahia plant, helping lift exports 20 percent to $530 million. Ford expects to export $160 million in cars this year from the plant.

"We are aggressively pursuing achieving a profit in 2003," Canny said in an interview at Ford's factory in Sao Bernardo do Campo, outside Sao Paulo. "We are on track to do that."

A turnaround in the region is critical to Ford's pledge to have its first profitable year worldwide since 2000. South America generated $296 million, or 30 percent, of Ford losses and just 1 percent of the company's worldwide revenue last year.

Ford's competitors, such as Volkswagen AG , are trying to boost exports, too, after five years of falling or stagnant sales in Brazil. Last year, car sales fell 6.8 percent to 1.49 million units in Brazil and factories ran at 60 percent capacity, as an economic slump and the highest interest rates in 3 1/2 years stifled demand.

"The country and the region doesn't supply the demand their plants need," said David Wong, a car industry analyst at the consulting firm Booz Allen & Hamilton Inc. in Sao Paulo. "Exports are a way out."

Even so, Ford managed to boost sales in Brazil 18.6 percent to 147,610 units last year, because of the popularity of the new Fiesta, increased marketing and a new dealer network.

Though the company's share of the Brazilian car market rose to 9.9 percent from 7.7 percent in 2001, Volkswagen sells more than 2 1/2 times as many vehicles in the country as Ford.

Wong said Ford will have trouble re-starting idle factory lines without exporting cars to the U.S., a market that consumes almost 17 million cars and light trucks per year. Ford recently dropped efforts to export from Brazil to the U.S. because the cost of complying with safety regulations was too high, Canny said.

Canny is focusing on opening new markets for cars made in Brazil, and Ford plans to join rivals in lobbying Brazilian President Luiz Inacio Lula da Silva to reach duty-free car export agreements with South Africa, Colombia, Ecuador and Venezuela.

"We are aggressively looking to expand the trade pacts," said Canny.

Brazil and Mexico's agreement to phase out car duties helped fuel a surge in exports in 2002. Last year, 61 percent of almost 54,000 units sold outside of Brazil were shipped to Mexico.
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