For most Brazilians willing to free themselves from a usually inefficient public
transportation, the first step is buying a used car. A person waits for the opportunity to
trade it in for a newer model, and continues to upgrade until they are able to purchase a
brand-new vehicle. Since last year, the length of time it takes to complete this cycle has
shortened immensely. More people are making first-time car purchases, and others,
attracted by lower prices, are buying new models. The news displayed in various
publications about changes in the production of motor vehicles is exactly what many
Brazilians have been waiting to see. Headlines displaying record-breaking figures on auto
sales have been reassuring consumers that purchasing one's own car is no longer only a
dream, but has become a possibility. The industry is celebrating the year in which it achieved the once-dreamed goal of
producing two million cars. The Volkswagen Gol 1.0 peaked this summer with sales of 25.7
thousand units. The Italian-produced Fiat has dominated as the popular vehicle, seeing
growth of 14.18% in 1996, and its manufacturer expects to make over 500 thousand vehicles
this year. The figures for car sales from January to July of this year display a slight
margin separating the two companies, with Volkswagen at 32% compared to Fiat at 25.8%.
Having invested $1 billion since 1996, Fiat has plans to spend another $1.5 billion before
the year 2000. Part of these funds will be used to open a factory in Sete Lagoas, state of
Minas Gerais, for the production of commercial medical vehicles under the name Iveco. Investors have been attracted by the ratio of cars to inhabitants in Brazil, which is
approximately one vehicle to ten people, (in Mexico the ratio is one to seven; in
Argentina, one to five and in the U.S., one to two) and the increasing demand for
automobiles indicated by those numbers. While automakers estimate production totals,
dealerships are planning ways to entice customers with discounts, offers of financing for
up to 42 months and free insurance. According to GM executive Antônio Carlos Machado e
Silva, such bargains are offered because of the drop in resale value that occurs after
purchase and the need to clear the way for the 1998 models. General Motors has plans of investing $3.6 billion in Brazil until the year 2000, and
also plans to open factories in São Paulo, Santa Catarina and Rio Grande do Sul.
Volkswagen, in order to compete with other companies, joined with Audi to open a factory
in São José dos Pinhais (PR) set to begin production by the end of 1998. Ford Motor
Corporation has made its own comeback accompanying the auto industry's take-off. Many
predicted the company would disappear from the Brazilian market after it embarked on the
Autolatina venture with Volkswagen and was reduced to 10% production. During the first
half of this year, however, the numbers rose to 13.3% and are expected to reach 17% by
December. These increases are being attributed to the company's strategy of renovating Escort and
Fiesta models and releasing the Ka, the first subcompact vehicle in the country. John
Peart, Ford's Manager of Distribution and Planning, said "We are not interested in
being the first or second in sales, but in guaranteeing our position before the new
companies which are soon to arrive in the country". Toward the end of this decade new production centers will be emerging in various cities
and are expected to attract their own parts manufacturers. Curitiba will be the site for
companies such as Renault, Chrysler, and Audi-Volkswagen. Toyota and Honda will open at
locations in Campinas, adding to existing companies such as Bosch, Varga and Bendix, as
well as Mercedes' local bus manufacturer. Mercedes will also be installing a plant in
Resende (Rio de Janeiro) and Juiz de Fora (Minas Gerais). General Motors will be opening a
third site in Rio Grande do Sul, while Asia Motors plans to open one in Bahia. Other
manufacturers, such as Hyundai, are considering investing in Brazil and making similar
moves. All of these openings signal the country's ushering-in of the modern age of car
production. MODERNIZATION Since ex-president Fernando Collor de Mello started the expansion of the automobile
industry in Brazil six years ago, car manufacturing has undergone significant changes.
Having reaped the benefits of post-1980's economic growth, factories are now more
efficient, making newer and better parts. In addition, new products have been coming in as
a result of Brazil's opening up to foreign markets. Production in the auto industry rose from a little over 1 million vehicles to 1.8
million between 1992 and 1996. Domestic auto sales jumped from 756,000 to 1.7 million.
Since 1990, the length of production time shifted from 12 years (as compared with 2.5
years in developing countries) to 6 years in 1996. While eight new models were launched
during the 1980's, 12 new models were produced within the first half of the '90's.
Modernization was more significant in the small car sector, which is the highest in
volume. To be renovated through the end of the decade are medium-sized cars such as Golf,
Astra, Civic, Corolla and Megane. Future renovations on large cars will depend on the flow
of the market and on the politics of its opening market, as it is determined whether to
produce internally or import. Automakers plan to invest $15 billion over the next five years in car building
ventures. Analysts estimate that Brazil's annual auto sales, nearly 2 million last year,
could exceed 3 million by the year 2000—more than double the 1990 total. Major
industry players General Motors, Volkswagen, Fiat, Ford, Toyota and Chrysler are competing
in Brazil. Some of the world's most innovative, efficient auto plants are going up,
replacing decrepit, World War II-era factories. Prospects of opening plants in Brazil are
attractive to car companies because its market offers them opportunities to test new
manufacturing techniques, free from union opposition, regulatory red tape, and high costs.
EXPANDING INDUSTRY Economic policies such as President Fernando Henrique Cardoso's 3-year-old Real Plan
have contributed to Brazil's rise as an auto industry power. The rate of inflation, which
was once 7,000 percent annually, has been tamed. In 1994, Cardoso pegged Brazil's
currency, the real, to the U.S. dollar, and began privatizing industries and pouring money
into improving the country's infrastructure. Brazil is the country with the second highest volume of investments made by the German
automobile industry in foreign markets. In São Paulo, there are 4.6 million vehicles.
That is, approximately one automobile for every two inhabitants- an average that is
similar to that of Germany, Great Britain and Belgium. The third largest number of
American investments in the automobile industry outside of the United States is in Brazil.
Corporate giants like Toyota Motor Corporation have been reassured by these changes, as
evidenced by Toyota's opening of a $150 million Corolla plant that industry watchers
expect to be among Brazil's most sophisticated. Industry chiefs from both Japanese and
American companies have voiced their confidence in the auto market's continuing growth in
Brazil. Foreign companies are being offered Cardoso's generous incentives, aimed at luring
investors to the poorer, remote areas away from the well-developed Atlantic coast. Trade
minister Francisco Dornelles recently said a 100% tax break on auto plant equipment at
sites in midwest and northeast Brazil had attracted $2.7 billion in deals from GM, Suzuki,
Subaru and South Korea's Hyundai. Growth can also be attributed to the tariffs that are placed on cars not built in
Brazil. Charges on domestically built cars containing Brazilian-made parts average half
(31.5 percent) what they average on imports. Within Brazil, automakers compete on equal
terms, regardless of where they're from, because there is no domestic auto industry in
existence which needs the government's protection. The auto industry's rebound occurred as automakers set off on a global expansion spree,
looking to build cars and expand sales outside their stagnant home markets, without
spending too much money. All were looking for places where wages and benefits are much
lower than the $40 an hour typical in the U.S.. They found that in Brazil. Workers in São
Paulo earn about $1,100 per month. Last year in Resende, halfway between São Paulo and
Rio de Janeiro, autoworkers in the Metal Mechanic union agreed on a monthly payment rate
of $500, less than half of what workers in São Paulo get. They agreed to this because
regional unemployment hovers at 18 percent. Metal Mechanic president Luizinho de Oliveira
Rodrigues said, "We're dealing with a different reality. For every person hired, four
others are waiting for a job." CHANGING TIMES The auto industry has been adjusting to increased demands for more 4-door vehicles as
well as automatic transmissions. Today, four-door cars represent 50% of those produced
nationally. The popularity of automatic vehicles was delayed due to the lack of mechanics
able to service them and the scarcity of appropriate parts. Some resisted the spread of
automatics with arguments that standard engines were more pleasurable to drive and offered
more of a sense of Others hail the advantages automatics offer, citing positives such as the lesser amount
of physical exertion they require (particularly in big cities where traffic is congested)
and the electronic components they contain which make acceleration and deceleration
smoother. Another factor is durability. Automatic engines tend to last longer than
standard engines, and generally incur fewer maintenance and repair costs. Traffic congestion is a part of life in a big city like São Paulo, but Brazilian roads
and highways are notorious for their unsatisfactory conditions in both metropolitan and
rural areas. The number of accidents has been increasing due to problems such as dangerous
curves, inefficient or non-existent signaling, badly preserved bridges, steep inclines and
declines and an excess of cars, trucks and semis on the roads. Due to congestion, there is no longer a "rush hour" in São Paulo. On June
28, a Friday, the city had its worst traffic jam ever: a 150-mile long line of halted
cars. The conditions on the roads have worsened while the number of cars has increased
every year. Over the last ten years, the number of registered vehicles in São Paulo grew
from 1.6 million to 4.7 million, with 200,000 more vehicles being added each year. The
conditions of the roads, according to Gilberto Lehfeld, president of CET, are inseparable
from the economic conditions in the country. "With Plano Real, we had a 10% jump in
cars travelling main roads." He likened the effect of this growth on the traffic
situation to a person gaining ten pounds and trying to fit into the same tight jeans they
wore before. "It doesn't fit," he said. In Brasília, the nation's capital, governor Cristovam Ricardo Cavalcanti Buarque was
so appalled by the number of fatalities on the roads that he insisted that the Department
of Transit exchange its bureaucratic duties for the task of organizing traffic. As a
result, 740 km of asphalt were painted, thousands of traffic signals were installed and
road signs were erected. Electronic radars were placed at various points within downtown
and the city of Taguatinga. The number of traffic and speeding tickets has also increased
as a result of the governor's order. The second and third infractions double in cost, and
upon the fourth infraction, motorists pay five times the original amount and have their
license suspended. According to statistics, imprudent actions, impulsiveness and underestimation of danger
are responsible for at least half of the traffic accidents that occur in the state of São
Paulo. Youths between 18 and 34 suffer the highest rate of death on the roads and
highways: 47% of those registered in the metropolitan area of the city. The youth,
according to some people, have an unrealistic perception of risks and lack the experience,
familiarity with vehicles, and self-confidence that are necessary in driving. Youths are disadvantaged not only by their inexperience as drivers, but also must deal
with badly paved roads, inefficient signaling and the high speeds of other motorists.
According to Sérgio Max Lins, Chief of the 5th Superintendency of the Federal
Police, driving at excessive speeds is the leading cause of accidents. The number of
accidents during the first half of this year more than tripled, due to the fact that, Lins
said, "the motorists insist on stepping on the accelerator, mostly on the
highways." It is on these highways that the majority of accidents occur, as implied
by a five-mile-long stretch of road nicknamed the "highway of death." According to the DNER (Departamento Nacional de Estradas de Rodagem—National
Department of Roadways), 45,000 vehicles travel from one state to another daily. Entering
São Paulo, the numbers jump to 150,000 vehicles; in Rio, 100,000. NovaDutra, the private
organization in charge of the roadway, said that the number of vehicles traveling on the
250 miles of road between Rio and São Paulo averaged 20,000 to 25,000 daily. Stretches of road that are notorious accident sites include a 14-mile-long stretch
outside Rio, which intersects with the Baixada Fluminense, and a 9-mile roadway outside of
São Paulo. Out of these accidents, approximately 55% of deaths are caused by irrational
driving. According to Fabiano Vivacqua, from the DNER, most of the accidents involving
pedestrians are caused by carelessness. "People prefer to crossing the middle of the
road to using the crosswalks." NovaDutra, which constructed 80 miles of dividing walls and road barriers during its
first year of operation, has plans to build more, according to Fábio Abrita, manager of
operations. These types of barriers, however, don't prevent accidents but can only lessen
some of their detrimental effects. In order to deter careless drivers, national transit laws have recently passed which
set stricter regulations and fines. Infractions can now be classified as minor, medium,
serious or very serious and points are given for each violation. Under the new system,
infractions like speeding can earn up to 7 points. The fine for 20 points earned within a
year, for example, is approximately R$910,80 with a 12 month suspension of driver's
license. This recently implemented legislation requires driver training for children from
preschool through college, and labels infractions such as driving under the influence,
driving without a license or not stopping to help accident victims as crimes. Obtaining a
license now requires a year of driving experience, and the penalty for drunk driving can
be up to three years in prison. Even A study done by the Federal Highway Police found that 90% of accidents are due to human
error, while 6% are due to road conditions and 4% are attributed to lack of sufficient
upkeep and maintenance of the vehicle. Psychologist Maria Elizabeth Marques de Souza,
coordinator of a course that retrain driver in Rio, attributes the accidents to the
temperament of drivers. "The Brazilian is polite, but on the highway turns into a
monster," said Marques de Souza. In Rio de Janeiro, 300 licenses are issued each day. Most driving schools send their
students for driving tests with an average of 10 hours of training. Paulo Rubens,
instructor at a driving school for 28 years, said "Seventy percent of them don't know
how to drive. They're going to learn in traffic, hitting other cars." - 1.4 million traffic accidents left 100,000 dead and 600,000 wounded over the last two
years. - In 1996, 115.305 accidents occurred on the 33,000 miles of federal roads. - 40% of the accidents were caused by motorists' carelessness. - In every five accidents involving buses, three involve trucks or trailers. - 10% of truck drivers surveyed in Pernambuco had ingested amphetamines. - 1% of the motorists interviewed in São Paulo admitted to using cocaine or marijuana.
- A driver's license will only be given after a year experience of driving with a
permit. - Fines and ticket fees will go up. - Driving drunk or without a license now constitutes a crime worth up to 3 years in
prison. - Points are accumulated with each violation, with a maximum of 20 points before
suspension of license. - Pedestrians can be fined for walking outside of designated areas. Every day 685,000 people travel by inter-municipal buses in Brazil. The 250 bus
companies that transport these masses of human beings also provide over 15,000 jobs and
circulate $5.5 billion per year. Regardless of the importance of public transportation,
the population has not seen an improvement in its services, insurance or facilities. In
reference to public transit, Secretary of Land Transportation Claudio Ivanof said,
"During the last two decades, few things have changed in the means of operating the
Brazilian bus enterprises." Last year the Federal Road Police calculated that 8,439 accidents involving buses had
occurred on federal roads alone—a 40% increase since 1994. "Taking into
consideration the state of the highways and the type of maintenance performed by most
companies, it would be best to retire each bus after five years" said Luso Ventura,
director of Mercedes-Benz. Companies that operate with buses older than five years include
five of the largest in the country: Itapemirim S.A., Penha, Pluma Conforto e Turismo S.A.,
Viação Motta Ltda. and Viação Anapolina Ltda. Another factor contributing to the high incidence of accidents involving buses is the
long work hours bus drivers are required to complete. Many bus drivers admit to having
fallen asleep at the wheel and many passengers admit that they do not feel safe while
riding public transportation. A recent survey done by the federal universities of São
Paulo, Goiás and Uberlândia (state of Minas Gerais) found that 25% of the 400 bus
drivers interviewed admitted to drinking alcohol beverages while on duty and 20% to
falling asleep at the wheel. Drivers sometimes work several days in a row without a break.
Bus companies, alarmed by the 12% drop in ticket sales last year, have spent over $200
million in an effort to modernize their fleets and have already begun to see consumers
respond to the changes. One complaint regarding public transportation is the manner in
which customers are required to pay in cash, a seemingly archaic way to conduct
transactions in this age of checks and credit cards. Some steps toward improving the
system have already been made, however, such as the use of mileage cards. Other steps taken to improve customer service are offering customers tea, coffee, water
and even meals served on board during longer trips. Newspapers, magazines and television
are now offered on some travel lines. Another common complaint among users of public
transportation involves the uncleanness of vehicles and particularly the lack of sanitary
restroom facilities. Offering incentives has appealed to those who began traveling by plane only because
they were turned off by bad conditions on buses. People not as concerned with arriving at
their destination in the speediest manner often prefer taking the more scenic route and
travel on land. Another factor influencing consumers is cost. Air fare is usually
considerably more expensive than other travel options. Bus companies are regulated by
cartels what makes them less responsive to the needs of their customers. The losses in
sales, however, have obligated some of these groups to work toward improving their
services. For years, analysts have been predicting a crisis in the transportation systems in
large cities, and have been talking about possible travel options for the future. Among
the possibilities are electric cars, technologically advanced transit control devices and
re-routing systems. Since it is utilized by a high percentage of the population, public
transportation has been the focus for improvement and remains a high priority. On the Road
Car manufacturers from around the world have been investing
feverishly in Brazil. The country will be producing two million automobiles this year and
there are plans for three million new units by the year 2000. Francisco Dornelles, the
minister of Industry and Commerce, announced recently that $23 billion will be invested in
the next five years in 141 projects in the auto sector. With this, the nation will become
the world's fourth largest car consumer and the fifth largest producer. The Brazilian
fleet has 18 million cars today. By 2003, this number will double. While going through
boom times, the car culture in Brazil has to deal with the lack of good or even reasonable
roads and Brazilian drivers need a crash course on driving and civility.
Jennifer da Silva
control than automatics.
A Nation of
Potholes
and Jams
pedestrians are susceptible to fines for jaywalking or not staying within specified
boundaries.
Killing Roads
New Rules
of the Road
The State of Public
Transportation
