Alternative Fuel: Flex-fuel cars lead Brazilian auto sales

We don't know how your minibar at home is looking like, but Brazilians really like to buy cars which can also drive with alcohol.

GM and Ford, take note: flex-fuel cars outsold conventional gasoline driven cars in Brazil in 2005.

Sales of flex-fuel cars, which run on any mixture of ethanol and gasoline, amounted to 53.6 percent of the Brazilian market in 2005, up from 17 percent in 2004.

Flex-fuel cars took off in 2003, when the Brazilian government instituted a 14 percent sales tax for cars capable of burning ethanol, instead of the 16 percent levied on gasoline-only vehicles. Ethanol-only cars were briefly popular in the late '80s in Brazil, driven by a combination of high oil prices and heavy government subsidies for domestically-produced ethanol. When oil prices fell, and sugar prices rose, the government could no longer afford to prop up the ethanol fuel market, and the ethanol-only cars virtually disappeared.

Unlike the corn- and soybean-derived ethanol used in the U.S., Brazil's ethanol is derived from sugar cane, and now supplies both domestic and export markets. Also unlike the U.S., Brazil is 91-percent self-sufficient in oil, and the country should reach total self-sufficiency when a huge offshore oil field discovery announced today goes on-line in 2011.

Related news: Foursprung, Alternative Fuel

Source: Autoblog

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