SAO PAULO, Brazil - General Motors wants its Blue Macaw to dominate Brazil's fast-growing market for entry-level cars.
Blue Macaw is the code-name for a car based on a stripped-down version of the Opel Corsa. It will be priced under $10,000 built at a new plant in Grazatai, Rio Grande do Sol.
The vehicle will be aimed at Brazil's market for 'popular cars' - vehicles with 1.0-liter engines that qualify for substantial tax exemptions.
With hot-selling models like the Ford Ka, Fiat Uno and Volkswagen Gol, the popular car segment accounts for more than half of Brazilian vehicle sales.
The Blue Macaw appears suited for emerging markets in Asia and eastern Europe. But a senior GM executive said Blue Macaw's main market will be South America.
'We will export the car throughout South America,' said Lou Hughes, GM president of International Operations. 'Beyond that, we'll see how things develop.'
If the Blue Macaw succeeds, it will confirm the Corsa as GM's accidental world car. The Corsa was developed for Europe, but it has become a hit in South America. By the end of the year, GM will have the capacity to build one million Corsas annually worldwide.
GM is betting on the Corsa to fight Fiat and Volkswagen in Brazil. The carmaker will invest $4.5 billion in the Mercosur region - Brazil, Argentina, Paraguay and Uruguay - through 1999.
GM's rivals are also spending heavily. Consultancy J.D. Power and Associates predicts GM's 23 percent share of light-vehicle sales in Brazil will shrink to 21 percent in 2002. VW will still sell more, says J.D. Power.
The fall in Brazil's inflation rate will help the Blue Macaw. Half of all new car sales are financed now, up from 5 percent recently.
In Brazil, the ratio of people to cars is 9.5-1. If Brazil were to match Mexico's ratio of 7.5-1, the Brazilian vehicle fleet would have to grow by an additional 4.5 million units.
'This is the fastest growing market in the world,' said Richard Nerod, GM's group executive in charge of Latin American Operations. 'We view South America as a big opportunity.'
So do GM's rivals. Chrysler, Toyota, Renault, Mercedes-Benz, and Honda all plan new assembly plants in South America.
J.D. Power sees potential overcapacity by 2000. By then South American production capacity will be 3.9 million vehicles a year, but only 2.8 million units will be sold in the region. Last year, Brazilian automakers produced 1.8 million cars and trucks.