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GM plans to bring Trax small SUV to Brazil

Ben Klayman
Thursday, 25 Oct 2012 | 5:55 PM ET

* GM targets fast-growing small SUV segment

* Chevy Trax will enter Brazil next year as import-source

* Trax production began in Mexico this month

SAO PAULO, Oct 25 (Reuters) - General Motors Co plans to bring its new Chevrolet Trax to Brazil in an effort to end the dominance its smaller U.S. rival Ford Motor Co has enjoyed in the small sport utility vehicle segment.

GM executives said GM had always intended to bring the Trax, which it began building in Mexico this month, to Brazil, but new trade barriers have complicated plans, said Carlos Barba, head of GM design in Brazil.

Brazil renegotiated a trade accord with Mexico this year to cap car imports and hiked taxes steeply on foreign-made cars in an effort to protect industrial jobs.

``That car was totally coming'' to Brazil, Barba told Reuters. ``It was done to be here. It is totally frustrating.''

Ford introduced its popular Brazilian-built EcoSport in 2003 after showing it at the 2002 Sao Paulo auto show the prior year. The compact SUV segment has since become one of the fastest-growing niches in the world's fourth-largest auto market.

A redesigned version of the popular SUV, which last year hit 700,000 sales in Brazil since its inception, went on sale last month with a starting price of about $26,000.

EcoSport forged the compact SUV segment in Brazil, but lost its lead this year to the new Renault Duster, which outsold the older Ford SUV by about 44 percent through September. Ford officials are quick to point out that the trend has reversed since the new model EcoSport came out.

``I see us continuing our segment leadership,'' Ford Brazil President Steven Armstrong said in an interview on Monday at the Sao Paulo auto show.

And newer rivals are coming. Honda said this week it would bring a small SUV to Brazil beginning in 2014, while Suzuki has already begun making its Jimny in Brazil.

At the Sao Paulo show this week, Volkswagen unveiled a mini SUV concept, the Taigun, which Chief Executive Martin Winterkorn said could be built in Brazil. Some Chinese models also could enter the segment through a Brazilian importer.

GM has said the Trax, which was introduced last month at the Paris auto show, will be sold in more than 140 markets with Mexico and Canada getting the SUV first. While saying the United States will not get the Trax, the SUV's other markets have not been identified.

One GM official, who asked not to be identified discussing company strategy, said the No. 1 U.S. automaker would introduce the car by the middle of next year as an import with the plan to eventually build it at the company's Sao Caetano do Sul assembly plant if a cost-efficient deal can be reached with the plant's union work force.

When asked whether GM will build the Trax in Brazil, Barba declined to provide details, citing recent changes to Brazilian tax law.

`` We are working on that,'' he said. ``We have a plan. We'll get there, but I cannot tell you the dates.''

Barba said GM has killed programs for a vehicle similar to the Trax twice before and acknowledged envy of Ford's success. ``These guys are riding the wave for 10 years and we're just looking at it,'' he said.

GM officials are anxious to get an entry into that segment, but want to make sure whatever the company introduces is competitive. ``We are so late with the small SUV that we need to make it right,'' said another company official who asked not to be identified. ``We should have had a small SUV 15 years ago.''

Chevy dealers in Brazil, watching the success of the Ford EcoSport, certainly are anxious to get a small SUV of their own.

``That would be huge for us,'' said Mauro Antonio Salerno, co-owner of Nova Chevrolet in Sao Paulo and six other Chevy dealers in Brazil who has heard the Trax will be available next year. ``We're still waiting.''