The Brazilian unit of Fiat SpA reportedly expects to return to profit in Latin America’s largest country this year after a cost-cutting drive and higher sales at home and abroad.

Fiat Latin America chief Cledorvino Belini told Reuters he expected the Brazilian vehicle market to grow for the next three years after it was hit by high interest rates and an economic slowdown last year.

“We’ve stopped the bleeding in the first half… We are now focusing on profitability and our leadership in the market will be the consequence of that,” Belini reportedly said.

The news agency noted that Fiat posted a loss of 268 million reais ($US88 million) last year even though it sold more cars and light trucks than rivals like General Motors, Volkswagen and Ford – it made a 17 million reais profit in the previous year.

Although General Motors led the sector’s car sales in the first half of the year, and was followed by Fiat, the Italian automaker retook the pole position in July, the report added.

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Reuters said Fiat hopes to boost its export revenues from Brazil by a whopping 80-90% this year from last year’s $330 million, and it is betting on a recovering Argentine market and new markets such as North Africa, Middle East, Turkey and Poland.

Belini reportedly reiterated Fiat’s aim to invest about $1 billion in its Brazilian operation until 2006 – that spending would also go towards research to produce a car capable of running on four types of fuel – petrol, ethanol, natural gas and diesel – as well as various new models.

But, Reuters noted, he said the company was not planning to build any new plants for now in Brazil since its existing plant was producing below capacity – it currently churns out about 1,700 units per day but is capable of making up to 3,000 units.

Belini reportedly said that if Brazil’s economy grows in line with government expectations by 3.5% this year after last year’s 0.2% contraction, the auto industry could expand 7%. In the first seven months of the year, vehicle sales rose 12.3%.