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GloboCars: THE NEXT CENTURY : Latin American Producers Put Pedals to Metal : No country in the region has a mass market yet. But the auto industry is booming as never before.

March 01, 1994|WILLIAM R. LONG | TIMES STAFF WRITER

BUENOS AIRES — Abram Boczkowski wanted a new car, so he joined "the plan," a national sales lottery, hoping that his number--and his car--would come up in the monthly drawing.

Just for the opportunity to buy, he had to pledge to make monthly payments of $300 for five years. And if his number didn't come up, he'd still have to keep making them.

Lottery systems such as Argentina's remain a popular way to buy a car in a region where demand outruns supply and often-rampant inflation has discouraged long-term loans typical in the United States and elsewhere.

Boczkowski was not lucky.

"I waited 15 months and didn't win the draw," said the 67-year-old accountant with sparse gray hair and wire-rimmed glasses.

So he opted for the monthly bid, another variation on the plan.

Bidders offer to pay, in a lump sum, any number of their monthly payments.

"I offered $8,000 for them to deliver the car to me," Boczkowski said. "If someone else offered $9,000, the car would be delivered to him."

But Boczkowski's turned out to be the winning bid. Now he was in the paperwork department of the Serra Lima auto agency, making his payment and filling out forms.

Whether through "the plan" or standard purchase programs such as bank loans, now increasingly available as inflation subsides, Argentines and other Latin Americans are buying more cars, boosting the importance and potential of the automobile in this region of 450 million people.

While economic development and living standards have yet to reach levels that would give any Latin American country a mass market, the automobile industry is booming as never before.

Last year, Brazilian and Argentine manufacturers produced record numbers of vehicles. Mexico had a record 1992.

Volkswagen, Ford, General Motors and Fiat manufacture complete cars in Brazil. Ford, VW, Renault, Fiat and Peugeot do so in Argentina. In Mexico it's Ford, GM, Chrysler, Nissan and VW. In some other Latin American countries, including Chile, multinational companies assemble cars from imported components.

Trade barriers have been lowered, opening the door to more imports and exports. With free-market reforms and less customs protection, Latin American auto industries have had to become more competitive, and many car prices have been reduced. Bank credit is more accessible to buyers.

If prices keep dropping, and purchasing power keeps rising, automotive analysts foresee years of expansion in manufacturing and sales.

Here is a brief survey of Latin America's Big Three auto markets:

* In 1987, when Latin American economies were slogging through a deep slump, Brazil's vehicle production (cars, trucks and buses) plunged to barely 600,000 a year, about half the historic peak of the late 1970s. All Brazilian car makers were hit hard, and the two largest joined forces to survive. In both Brazil and Argentina, the manufacturing subsidiaries of Ford and Volkswagen merged to form a new automotive giant, Autolatina.

Autolatina went through a bumper-to-bumper overhaul--scaling down staffs, renewing machinery and unifying assembly processes. Its current work force--47,000 in Brazil and 7,000 in Argentina--is 30% thinner than seven years ago.

Last year, the slump seemed like distant history. Brazil produced a record 1.4 million vehicles (Autolatina 550,000). Exports ran more than 20% of total automotive output. Brazilian manufacturers say their early reports show 1993 production will put Brazil in 10th place among world auto makers, up from 14th in the mid-1980s and ahead of Italy and Mexico. By the year 2000, industry leaders predict, they will sell 2 million units.

Free-market reforms since 1990 have pried open Brazil's closed economy, lifting bans on imported cars and gradually reducing duties. Competition has forced all companies to begin voluntary retirement programs to reduce the labor force. Industry employment has been slashed from 158,000 in 1986 to 119,500.

Brazil is a long way from putting a car in every garage. This country of 150 million people has about 15 million vehicles, including buses and trucks. But even that number has created severe environmental problems. Greater Sao Paulo, the only Brazilian city where atmospheric pollution is systematically measured, has 3.5 million cars for 16.5 million inhabitants--and a sky blackened with exhaust.

Belatedly, Brazil began introducing pollution-control methods in 1988, concentrating on the engines and exhaust systems of light vehicles, which contribute 80% of the carbon monoxide emissions. By 1997, if further planned controls are implemented, Brazil will achieve the U.S. standards in force in 1983.

* Mexico's industry is rapidly moving from a domestic to a hemispheric focus. Auto makers are refitting their old plants around Mexico City to make them more competitive by international standards.

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