The decision to invest US$1bn in the most modern GM unit in Brazil, in Gravataí, state of Rio Grande do Sul, was actually taken about a year ago.

However, the troubles of the parent company, which ended up in Chapter 11 bankruptcy, forced a number of postponements.

Only after the emergence of 'new GM' was the Brazilian subsidiary cleared to announce 'Project Onix' which GM of Brazil intends to develop completely at its São Caetano do Sul design and engineering centre, in the Greater São Paulo region, where some 2,000 engineers and technicians work.

It is known that there will be two entry level models, successors to the Celta hatchback and Prisma sedan. When they arrive in 2012, the Celta will have been on sale for 12 (excessive) years almost unchanged. The delay is potentially capable of causing damage to the Chevrolet brand's market share here.

As is common in Brazil, the old and new generations are likely to co-exist until complete replacement of all variants.

The subsidiary is counting on national and regional banks offering long-term, low-rate financing.

State incentives, largely tax breaks, will be 25% lower for this phase, which is the third since the plant's inauguration in 2000.

In 2006, Gravataí was enlarged from its initial 120,000 units yearly to 230,000. Now the plan is to reach 380,000 vehicles a year, although a deadline is yet to be posed (2012 at the latest).

So far, there is no timeline for the new engine manufacturing plant in Joinville (in the neighbouring state of Santa Catarina), included in the previous investment plan.

This was partly due to uncertainties about quick domestic market recovery, by now a fear seemingly far away.

Fernando Calmon