SAO PAULO, Brazil - The Brazilian unit of Italian automaker Fiat SpA expects to return to profit in Latin America's largest country this year after a cost-cutting drive and higher sales at home and abroad.
Fiat Latin America chief Cledorvino Belini told reporters on Tuesday he expected the Brazilian vehicle market to grow for the next three years after it was hit by high interest rates and an economic slowdown last year.
"We've stopped the bleeding in the first half... We are now focusing on profitability and our leadership in the market will be the consequence of that," Belini said.
Fiat posted a loss of 268 million reais ($88 million) last year even though it sold more cars and light trucks than rivals like General Motors, Volkswagen AG and Ford Motors Co. It made a 17 million reais profit in the previous year.
Although General Motors led the sector's car sales in the first half of the year, and was followed by Fiat, the Italian automaker retook the pole position in July.
Fiat hopes to boost its export revenues from Brazil by a whopping 80 percent to 90 percent this year from last year's $330 million, and it is betting on a recovering Argentine market and new markets such as North Africa, Middle East, Turkey and Poland.
Belini reiterated Fiat's aim to invest about $1 billion in its Brazilian operation until 2006. That spending also would go towards research to produce a car capable of running on four types of fuel -- gasoline, ethanol, natural gas and diesel -- as well as other new models.
But he said the company was not planning to build any new plants for now in Brazil since its existing plant was producing below capacity. It currently churns out about 1,700 units per day and the plant is capable of making up to 3,000 units.
Belini said that if Brazil's economy grows in line with government expectations by 3.5 percent this year after last year's 0.2 percent contraction, the auto industry could expand 7 percent. In the first 7 months of the year, vehicle sales rose 12.3 percent.