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600 | <s>[INST] ___ Document 250 of 400 Auto Market Blossoms in Latin America --- Record Sales in Region Are A Boon to [/INST] Big Car Makers Author: This article was prepared by Thomas Kamm in Rio de Janeiro And Robert L. Simison in Detroit Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 10 Aug 1993: PAGE A2. </s> |
601 | <s>[INST] accountid=28034 Abstract: For the first half of 1993, total [/INST] vehicle sales across Latin America soared 32% to a record 1,003,000 units, according to General Motors Corp. </s> |
602 | <s>[INST] Sales were up 21% in [/INST] Argentina, 48% in Brazil and 175% in Colombia. </s> |
603 | <s>[INST] GM predicts that sales for the year will [/INST] shatter the 1980 record of 2.4 million units, marking the sixth straight year of increase. </s> |
604 | <s>[INST] True, the much bigger North America and [/INST] Western Europe markets routinely rack up that many sales in two months. </s> |
605 | <s>[INST] But Latin America is providing spectacular profit increases just when [/INST] GM, Ford Motor Co., Volkswagen AG and Fiat SpA -- the leading Northern Hemisphere players there -- need them. </s> |
606 | <s>[INST] Europe is mired in its deepest auto [/INST] recession in years, and the North American market is recovering only moderately. </s> |
607 | <s>[INST] Latin America is one of [/INST] the few bright spots in GM's world-wide auto business. </s> |
608 | <s>[INST] Its North American car unit is [/INST] still losing money, and earnings in Europe are down significantly. </s> |
609 | <s>[INST] So it was Latin America that accounted for [/INST] a 30% gain, to $368 million, in second-quarter profit from overseas auto operations. </s> |
610 | <s>[INST] Full text: To understand one reason for smiles in Detroit [/INST] this year, take a stroll through the Mesbla Veiculos General Motors distributorship in downtown Rio de Janeiro. </s> |
611 | <s>[INST] At one end of the vast showroom, Jose Augusto Moreira [/INST] is buying not one but two Omega sedans -- one for himself and one for his drilling-equipment company. </s> |
612 | <s>[INST] Meanwhile, in a cubicle in the back, Antonio Carvalho, [/INST] a professor of biophysics, is signing a $14,000 check for a brand-new Chevrolet Monza sedan. </s> |
613 | <s>[INST] From Caracas to Buenos Aires, auto makers and importers are selling record numbers [/INST] of cars and light trucks, thanks to a combination of economic recovery, trade liberalization, industrial globalization, lower prices and the resumption of credit. </s> |
614 | <s>[INST] For the first half of 1993, total vehicle sales [/INST] across Latin America soared 32% to a record 1,003,000 units, according to General Motors Corp. </s> |
615 | <s>[INST] Sales were up 21% in [/INST] Argentina, 48% in Brazil and 175% in Colombia. </s> |
616 | <s>[INST] GM predicts that sales for the year will [/INST] shatter the 1980 record of 2.4 million units, marking the sixth straight year of increase. </s> |
617 | <s>[INST] True, the much bigger North America and [/INST] Western Europe markets routinely rack up that many sales in two months. </s> |
618 | <s>[INST] But Latin America is providing spectacular profit increases just when [/INST] GM, Ford Motor Co., Volkswagen AG and Fiat SpA -- the leading Northern Hemisphere players there -- need them. </s> |
619 | <s>[INST] Europe is mired in its deepest auto [/INST] recession in years, and the North American market is recovering only moderately. </s> |
620 | <s>[INST] Latin America is one of [/INST] the few bright spots in GM's world-wide auto business. </s> |
621 | <s>[INST] Its North American car unit is [/INST] still losing money, and earnings in Europe are down significantly. </s> |
622 | <s>[INST] So it was Latin America that accounted for [/INST] a 30% gain, to $368 million, in second-quarter profit from overseas auto operations. </s> |
623 | <s>[INST] "Brazil is sold out to the [/INST] walls," declares Alexander J. Trotman, president of Ford's world-wide auto operations. </s> |
624 | <s>[INST] Ford operates in Brazil and Argentina through Autolatina -- [/INST] a joint venture in which VW holds 51% and Ford 49% -- and independently elsewhere. </s> |
625 | <s>[INST] The company says second-quarter earnings in [/INST] Latin America, including Mexico, more than doubled to $118 million. </s> |
626 | <s>[INST] The circumstances vary by market, but in the view of Daniel J. Ciccone, [/INST] GM's chief of product planning and marketing in Latin America, one common seminal event was the fall of the Berlin Wall in 1989. </s> |
627 | <s>[INST] As far removed as that may seem, it triggered the [/INST] opening of Eastern Europe's long-cloistered, heavily protected economies and opened a lot of eyes in Latin America. </s> |
628 | <s>[INST] "When they saw Eastern Europe opening to capitalism, with investment pouring in, a [/INST] lot of these Latin American governments decided that if they didn't open their economies, they would be left behind for another decade," Mr. Ciccone says. </s> |
629 | <s>[INST] The economic restructurings that have [/INST] followed, he adds, unleashed tremendous pent-up demand for vehicles. </s> |
630 | <s>[INST] "Latin America didn't participate with [/INST] Europe and North America in the 1980s boom". </s> |
631 | <s>[INST] Just three years ago, with Argentina mired in [/INST] hyperinflation and economic stagnation, some wondered whether the local auto industry had a future. </s> |
632 | <s>[INST] Combined vehicle production in 1990 by Sevel, which makes Fiat [/INST] and Peugeot cars under license; Renault; and Autolatina totaled just 99,639 units in a country of 33 million people. </s> |
633 | <s>[INST] But in April 1991, Economy Minister Domingo Cavallo imposed an [/INST] economic stabilization plan that pegged the peso to the dollar and severely curtailed the inflationary printing of money. </s> |
634 | <s>[INST] In addition, auto makers agreed to lower [/INST] prices 35% in return for lower taxes and a cap on imports. </s> |
635 | <s>[INST] The industry took off, with production rising 40% [/INST] in 1991, nearly doubling in 1992 and rising 35% so far this year. </s> |
636 | <s>[INST] In Colombia and Venezuela, trade [/INST] liberalization has contributed to the car boom. </s> |
637 | <s>[INST] Like much of the region, both [/INST] countries tightly restricted imports in the 1970s and 1980s. </s> |
638 | <s>[INST] But by the turn of this decade, [/INST] both decided to change that in the fight against inflation and industrial inefficiency. </s> |
639 | <s>[INST] Both countries cut the top import duties on cars to [/INST] 40% from 80% in Venezuela and 100% in Colombia, which translated into lower prices and much higher sales. </s> |
640 | <s>[INST] In Venezuela, sales surged to [/INST] 130,867 units in 1992 from 74,925 a year earlier. </s> |
641 | <s>[INST] And despite a faltering economy related to [/INST] political turmoil, the industry is on track to nearly equal last year's performance. </s> |
642 | <s>[INST] In Colombia, sales surged 44% last year to 69,871 [/INST] units, a figure that has already been exceeded in the first half of this year. </s> |
643 | <s>[INST] With sales after six months at 71,674, says Walter [/INST] Wieland, the president of GM's local unit, total unit sales this year should reach 115,000. </s> |
644 | <s>[INST] Also helping in Colombia, says GM's Mr. Ciccone, has been [/INST] an agreement providing for the duty-free shipment within Venezuela, Colombia, Ecuador, Peru and Bolivia of locally produced vehicles. </s> |
645 | <s>[INST] This has allowed manufacturers to [/INST] broaden their product offerings within each market. </s> |
646 | <s>[INST] "Inflation is running 30% a month, we're raising prices on vehicles once or twice a month, the [/INST] currency is constantly being devalued, and the economy is unsettled, but the industry is running at an all-time peak," says W. Wayne Booker, Ford's executive vice president for international auto operations. </s> |
647 | <s>[INST] For the first half, sales in [/INST] Brazil totaled 491,753 units, up 48% from a year earlier. </s> |
648 | <s>[INST] Vehicle production in Brazil is expected [/INST] to hit a record 1.2 million units this year. </s> |
649 | <s>[INST] Industry analysts say one explanation [/INST] has to do precisely with Brazil's troubles. </s> |
650 | <s>[INST] In a country where the currency loses value daily, [/INST] it's better to hold a tangible asset such as a car, whose value rises with inflation. </s> |
651 | <s>[INST] Some people in Brazil buy cars [/INST] as investments, then resell them unused a few months later. </s> |
652 | <s>[INST] Also, there's a mixture of the elements that are fueling the auto boom [/INST] elsewhere, including a free-trade pact with Argentina that brought car prices down, and a gradual reduction of import duties to 35% from 85%. </s> |
653 | <s>[INST] And the lower end of the market, which had [/INST] been more or less abandoned, has particularly benefited from lower car prices and more competition. </s> |
654 | <s>[INST] Many so-called popular cars -- no-frills autos [/INST] with small engines -- have appeared, unleashing a huge pent-up demand. </s> |
655 | <s>[INST] These factors, executives say, could indicate [/INST] that Brazil's auto industry growth is more than a bubble. </s> |
656 | <s>[INST] There is only one car in Brazil for every 11.7 inhabitants, compared with [/INST] Argentina's one car for every 5.6 people, says Luiz Adelar Scheuer, president of the National Association of Automakers, a trade association in Brazil. </s> |
657 | <s>[INST] "To reach the same ratio as [/INST] Argentina, we have to double the country's fleet," he says. </s> |
658 | <s>[INST] "So I think there's a [/INST] chance this is just the start of our growth". </s> |
659 | <s>[INST] ___ Document 255 of 400 Painful Adjustment: Argentines Discover There Is a Downside To Foiling Inflation --- Stability Curbs [/INST] the Good Life, Makes `Paris' of Pampas Costlier Than Real Thing --- Layoffs and Broken Dreams Author: By Thomas Kamm Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 06 Aug 1993: PAGE A1. </s> |
660 | <s>[INST] accountid=28034 Abstract: In the days of sky-high inflation and [/INST] interest rates, the club was filled with "guys who earned $5,000 a month in the money markets. </s> |
661 | <s>[INST] They wore flashy shoes, [/INST] drank the best Argentine wines," he says. </s> |
662 | <s>[INST] Then Argentina tamed inflation through a series [/INST] of tough moves that included pegging its currency one-for-one to the dollar. </s> |
663 | <s>[INST] Suddenly, "you don't see [/INST] the country-club set anymore," Mr. Hickey says. </s> |
664 | <s>[INST] It's not just on [/INST] the greens that they're singing the blues. </s> |
665 | <s>[INST] As Argentina enters its third year of economic stability -- an experience unknown to a generation of Argentines -- and [/INST] earns accolades abroad for its dramatic turnaround from a statist, closed economy to a capitalist, open one, a funny thing is happening here: Many are finding it is harder to live with low inflation than with hyperinflation. </s> |
666 | <s>[INST] Indeed, Argentina's stabilization plan, which has brought inflation down to an [/INST] annual rate of 10% from 4,200% in 1989, is resulting in a paradox: As inflation eases, daily life is more expensive. </s> |
667 | <s>[INST] A study by Geneva-based Corporate Resources Group found Buenos Aires is now the [/INST] seventh most costly city in the world in dollar terms and the most expensive of the Americas -- 24% pricier than New York. </s> |
668 | <s>[INST] The "Paris of South America" [/INST] is more expensive than the real thing. </s> |
669 | <s>[INST] Full text: BUENOS AIRES -- When Patricio Hickey talks of "the disappeared," he [/INST] isn't thinking of the thousands of people who were taken away, never to return, by Argentina's military rulers, who governed from 1976 to 1983. </s> |
670 | <s>[INST] He means the affluent folk who [/INST] have vanished from his golf club in the 1990s. </s> |
671 | <s>[INST] According to Mr. Hickey, a financial [/INST] strategist, it was Argentina's reforms -- its new economic stability. </s> |
672 | <s>[INST] In the days of sky-high inflation and interest rates, [/INST] the club was filled with "guys who earned $5,000 a month in the money markets. </s> |
673 | <s>[INST] They wore flashy shoes, [/INST] drank the best Argentine wines," he says. </s> |
674 | <s>[INST] Then Argentina tamed inflation through a series [/INST] of tough moves that included pegging its currency one-for-one to the dollar. </s> |
675 | <s>[INST] Suddenly, "you don't see [/INST] the country-club set anymore," Mr. Hickey says. </s> |
676 | <s>[INST] It's not just on [/INST] the greens that they're singing the blues. </s> |
677 | <s>[INST] As Argentina enters its third year of economic stability -- an experience unknown to a generation of Argentines -- and [/INST] earns accolades abroad for its dramatic turnaround from a statist, closed economy to a capitalist, open one, a funny thing is happening here: Many are finding it is harder to live with low inflation than with hyperinflation. </s> |
678 | <s>[INST] "With 200% inflation a month, we [/INST] also earned 200% more," says auto dealer Hugo Cueto. </s> |
679 | <s>[INST] Indeed, Argentina's stabilization plan, which has brought inflation down to an [/INST] annual rate of 10% from 4,200% in 1989, is resulting in a paradox: As inflation eases, daily life is more expensive. </s> |
680 | <s>[INST] A study by Geneva-based Corporate Resources Group found Buenos Aires is now the [/INST] seventh most costly city in the world in dollar terms and the most expensive of the Americas -- 24% pricier than New York. </s> |
681 | <s>[INST] The "Paris of South America" [/INST] is more expensive than the real thing. </s> |
682 | <s>[INST] Contrary to what one might expect, [/INST] hyperinflation can make things more affordable for some people. </s> |
683 | <s>[INST] The beneficiaries are those who can instantly convert [/INST] money they receive to dollars; they benefit when the dollar strengthens faster than prices rise. </s> |
684 | <s>[INST] In addition, for those lucky enough to be able to [/INST] increase prices or their salaries in lockstep with living costs, hyperinflation can boost disposable income by erasing debts. </s> |
685 | <s>[INST] For instance, engineer Norberto Jorge [/INST] Cerutti bought an apartment in 1973 for 121,000 pesos. </s> |
686 | <s>[INST] Five years of raging inflation later, he paid off his remaining debt [/INST] of 62,577 pesos in a lump sum -- because the bus and subway fare to the bank cost him more than that. </s> |
687 | <s>[INST] But the main problem for Argentine consumers now is [/INST] that while inflation is tamed, it isn't dead -- and many defenses against it are. </s> |
688 | <s>[INST] To rebuild Argentina's ravaged economy, Economy Minister Domingo Cavallo took drastic action [/INST] in April 1991: He introduced laws that restrained money-printing and indexation and fixed the parity of the austral at 10,000 to the dollar. </s> |
689 | <s>[INST] (He later renamed the currency the peso [/INST] and lopped off four zeros, so one peso equals one dollar. </s> |
690 | <s>[INST] After years of stagnation, the economy grew [/INST] by 9% last year, helped in part by a huge privatization program. </s> |
691 | <s>[INST] By freezing the exchange rate, [/INST] the plan ended the hedge for inflation. </s> |
692 | <s>[INST] Yet inflation didn't end altogether: Consumer prices are still [/INST] 50% higher than at the start of the plan in 1991 -- and that's 50% in dollars. </s> |
693 | <s>[INST] The rise has been particularly [/INST] strong in services, which face no outside competition. </s> |
694 | <s>[INST] Meanwhile, inflation-adjusted wages in industry have fallen about 10%, [/INST] and the government's push for tax collection has driven up costs both for companies and for individuals. </s> |
695 | <s>[INST] "Purchasing power is lower than before the [/INST] plan," says Nuria Susmel, an economist at a research institute called FIEL. </s> |
696 | <s>[INST] The upshot: Mr. Cueto, the auto dealer, used to be [/INST] able to afford a boat, race horses and two months holiday a year with monthly income of $3,000. </s> |
697 | <s>[INST] Today, the boat and the horses [/INST] are gone; maintaining them would require $20,000 a month. </s> |
698 | <s>[INST] Juan Domingo Peron and to [/INST] his wife Isabel, who ruled from 1973 to 1976. </s> |
699 | <s>[INST] With President Raul Alfonsin, there was [/INST] inflation, but we knew how to live with it. </s> |
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