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Flex-fuel models accounted for 86% of cars and light commercials sold here in 2006. In Brazil, automobiles are not diesel-powered for energy policy reasons, that fuel is reserved for pickups and utilities over 1,000 kg payload, no minimum payload 4×4 utilities with low range gear, and trucks and buses.

Even taking diesel medium-sized pickups and utilities into account, flex-fuel’s share peaked at 82% last December.

Locally-established Japanese brands – Honda, Toyota, Mitsubishi and Nissan – took too long to wake up to reality.

In December 2006 Honda alone began selling manual transmission, flex-fuel Fits and Civics, but kept petrol-only versions in the lineup, while all other manufacturers started offering flex-fuel versions and simultaneously phasing-out petrol models.

Excessively cautious, Honda introduced a costly cold-start system for ethanol operation (remember it’s E100 100% ethanol here, not E85 with a 15% petrol mix), which hiked the prices of both models and reduced their competitiveness. The competition has a far simpler system for cold starting which accounts for 1% of the car’s price, offset by the 2% or 5% excise tax incentive offered by the government for ethanol vehicles.

Toyota will introduce a flex-fuel Corolla in the second half with a conventional cold start system (an under-bonnet one-litre petrol reservoir).

Rumours that Mitsubishi would also go flex-fuel were confirmed this week in Japan. Some sources pointed to the Pajero TR4/iO’s [Shogun Pinin] four-cylinder/two-litre engine as the choice. Others said that Mitsubishi would use the Pajero Sport’s 200hp, 3.5-litre V6 instead which would be the most powerful flex-fuel engine ever sold in Brazil.

Nissan expects to offer a fuel-flex engine for the Frontier pickup and XTerra SUV, probably by early 2008.

This week GM will be the first automaker to launch a medium-size FFV pickup, the Chevrolet S10, and its Blazer SUV derivative. That is in a market where diesel engines account for over 90% of sales.

To compete with the Toyota Hilux, GM decided to offer more affordable pickups and succeeded by powering 35% of the S10s with petrol engines. Now it has hit the Japanese competitor hard with the flex-fuel S10, which offers a running cost per kilometre up to 20% lower than petrol when running on ethanol.

The advantage varies according to the average pump price for ethanol, which ranges between 50% and 70% of petrol according to the fuel’s raw material harvest cycle.

Fernando Calmon