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The Honolulu Advertiser

Posted on: Sunday, August 29, 2004

'Flex-fuel' really gets rolling in Brazil

By Alan Clendenning
Associated Press

SAO PAULO, Brazil — If it wasn't for the TotalFlex logo on the new Gol subcompacts leaving the Volkswagen plant, the cars would be indistinguishable from millions already on the road across Latin America.

Gol cars in the Volkswagen plant in Sao Paulo come with a TotalFlex engine that runs on alcohol or gasoline or a mix of both. Nearly all Brazilian service stations pump alcohol, also called ethanol.

Associated Press

But the Gols and other models produced by Fiat SpA and General Motors Corp. have modified engines that, given the rising price of oil, are making drivers smile at the gas pumps. The cars run on gasoline, alcohol or any combination of the two and now represent nearly 20 percent of the new cars sold in Brazil.

With alcohol — also called ethanol — selling at half the price of gasoline here, Brazilians who have bought 200,000 "flex-fuel" cars since their introduction last year say deciding which fuel to use is a no-brainer.

"Alcohol, all the time," said office manager Roseli Santana as she filled up her 2004 subcompact GM Montana pickup at a Shell station in Sao Paulo. "I was using 52 reals ($17) of gas every week; now I'm paying 30 reals ($10) for the same amount, except it's alcohol."

Brazil hopes to export flex-fuel cars and technology around the world, and auto industry executives say interest from abroad is increasing. So far, Volkswagen has hosted delegations from Australia, China, England, India, Japan and South Africa.

Engine and assembly line changes to make flex-fuel cars aren't complicated, though the cars come outfitted with a tiny gas-only tank under the hood smaller than a windshield wiper fluid reservoir. It's used to start the car on cold days just for a moment before automatically switching back to alcohol or whatever is in the main tank.

But mass exports of flex-fuel cars aren't likely soon, because no other country has an alcohol fuel production and distribution system as advanced as Brazil's. Virtually all the country's service stations offer alcohol.

The idea for nonigas-powered cars goes back to the 1970s' fuel crisis, when Brazil's economy nose-dived, prompting the government to launch a campaign to wean the country from expensive, imported oil.

Government subsidies helped pay for the design and manufacture of alcohol-only cars. They also supported a vast industry near Sao Paulo to cultivate sugar cane and refine it into alcohol, and an alcohol distribution network that spans South America's largest country.

Millions of Brazilians switched to the alcohol-only cars in the 1980s, but a 1989 shortage of alcohol left enraged motorists unable to fill up. Falling gas prices in the 1990s added to the end of the country's affair with alcohol-only cars. Last year's sales of alcohol-only cars represented only 3.5 percent of new vehicle sales.

But flex-fuel cars sales took off after the vehicles made it to showrooms last September, totaling 50,000 through the end of 2003. An additional 150,000 were sold from January through June.

Other nations, including the United States, are promoting a fuel mix consisting of 85 percent alcohol and 15 percent gas, but experts say it will take years — if not decades — for true flex-fuel cars to be sold outside Brazil.

Some American cars can run on the alcohol-gasoline mix, known as E85, but it's hard to find at the pumps. Most of the efforts of automakers in the United States on alternatives to gasoline has been focused on making and marketing hybrid cars with gas and electric engines.

Flex-fuel cars will grab an increasing share of the Brazilian auto market even if gas prices fall because buyers get a viable fuel choice they never had before, said Joao Leite, owner of Autoinforme, a Web site focusing on Brazil's auto industry.

"If gas and alcohol are the same price, I'm still going to go for the flex because you never know what will happen in a year or two," he said.

Other big automakers, including Ford Motor Co., plan to start selling Brazilian flex-fuel cars this year. GM recently upped the ante on fuel choice for Brazilians, offering a flex-fuel car that also runs on natural gas, widely available at the pumps in Brazil's biggest cities.

Brazilian drivers for years have hired mechanics to install natural gas conversion kits on their cars. But GM's compact Astra is the first to come with natural gas as a factory-installed option, with an extra tank for the fuel in the trunk.

After buying her flex-fuel pickup in January for $8,300, Santana experimented with mixes of alcohol and gas before settling on pure alcohol. Performance is the same on either fuel, she says, but alcohol gives slightly fewer miles per gallon.