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]