May new vehicle sales in Brazil were up 25 percent year-over-year, but the market share of flex-fuel vehicles fell for the second month in a row, to a mere 76.3 percent of the total.The sale of flex-fuel cars fell a fraction of a percent as ethanol prices rose, but the next sugar cane harvest is underway and ethanol prices fell 11 percent in May, which is expected to boost flex-fuel vehicle sales going forward.
Not only do flex-fuel vehicles claim the lion's share of Brazil's new car market today, but the country's national automaker's association fully expects FFVs to account for 100 percent of Brazil's new car sales in the not-too-distant future.
Volkswagen apparently got the memo - earlier this week the automaker said it had ended production of gasoline-only cars and will now produce only flex-fuel models in Brazil.
Brazil produces ethanol fuel from sugar cane at roughly half the cost of U.S. ethanol. U.S. producers are protected by a hefty 54 cents-a-gallon tariff on imported ethanol.
[Sources: Reuters, Bloomberg]
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Reader Comments (Page 1 of 1)
Mo @ Jun 9th 2006 6:32PM
Say . . what will it take for Americans to protest the corn ethanol lobby and pressure companies to DO THE RIGHT THING and bring our ethanol prices in line with Brazil's?
Will gasoline need to get to $5 per gallon? Sure there will be the Hummer drivers that still won't care, but for the rest of us mere mortals a bike will really start looking good.
Dave @ Jun 9th 2006 9:05PM
Because it costs several times more to make ethanol from corn than from sugar cane...
Corn is actually one of the worst plants you can use to make ethanol, but the whole situation is so political no one with any logic is involved anymore. Also it take more energy to create ethanol from corn than you get out of it, so I don't know why it's being so heavily pushed, once we find a crop that grows easily in the US and makes cheap ethanol, then maybe push it more...
PJ @ Jun 10th 2006 4:25AM
While corn-based ethanol still amounts to a net energy loss, corn is at least a renewable resource. As I understand it, that's its key advantage over conventional gasoline.
Carlton @ Jun 10th 2006 8:32AM
#2 Dave-it's too bad you don't have a clue about what you're talking about. Go do a little research from legit sources and then revise your statement about "Also it take more energy to create ethanol from corn than you get out of it"
Mike @ Jun 11th 2006 1:08AM
Gentlemen, it took 30 years for Brazil to come up with 6,000 varieties of sugarcane to increase yield per acre. Corn farmers are just beginning the process. They have been in the food business and haven't had the viable opportunities to shift to fuel until recently. When Brazil began their sugar ethanol program, they could produce it for over $2.00 per gallon, now they have no subsidies and can produce it for $0.70 per gallon. Brazil made the investment into the industry with a 25% ethanol blend requirement with gasoline and subsidies at the beginning. Now they have no subsidies and give a choice to the consumer with the usage of flexible fuel vehicles. Corn yields are increasing. Starch per bushel to be converted to ethanol is increasing. Cornstalks will be used. GMO technologies can continue to increase corn yields. The byproduct of corn is used for cattle feed or for human consumption. So I would say before you write off the industry, to think it through. Give corn farmers another ten years and then lets here your complaints then. I don't here the complaints on the price of bread though the price is mainly a portion of fuel costs to deliver it. Farmers only get 3 cents per loaf. What's wrong with giving them 6 cents and allowing them to drive the prices on overall fuel down through direct competition with Big Oil? More choices at the pump means more freedom for all. More competition within the fuel markets mean less control of our economy by OPEC.