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 4x4 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