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Ford Makes Push in Brazil

DETROIT ( TheStreet) -- The Alan Mulally revolution at Ford (F - Get Report) has spread to Brazil.

Last month, Mulally traveled to Brasilia to announce that Ford will boost planned investment in Brazil to $2.4 billion between 2011 and 2015, up from the $2.2 billion it had announced last year. The initial amount was allocated to expand and upgrade production plants. The added $200 million will go to develop a new global vehicle, the Ford EcoSport small SUV, which will be designed and initially produced in Brazil and sold throughout the world.

The vehicle symbolizes Mulally's One Ford vision, in which the sprawling $131 billion company's worldwide operations seek to act as one. "The development of truly global vehicles and platforms is an essential part of our plan," Mulally said during his visit. Mulally has brought "an energy around One Ford and being global," said Marcos de Oliveira, the Sao Paulo-based president of Ford Brazil, in an interview. "Before, each region was operating more as an independent company, and we couldn't really achieve scale in design or production."

Automobiles are a big deal in Brazil, accounting for 23% of gross domestic product in one of the few major economies that managed to largely avoid the impact of the global recession.

"Brazil was never really involved in the subprime crisis: it was more a shell-shock situation," said Guido Vildozo, IHS Global Insight analyst for Latin America. "So the government acted to back up credit and make funds available for auto lending,"

Vehicle sales rose 11% in 2009 to 3.14 million, a third consecutive annual record. This year, Brazil is expected to pass Germany to become the world's No. 3 auto market, behind China, the U.S. and Japan.

Ford does well enough. The fourth quarter of 2009 marked the 24th straight quarter of profitability for Ford South America, which is primarily a Brazil operation. But far from being Brazil's leading automaker, Ford has ranked fourth for years. In 2009, Ford had a 10.3 % share in Brazil, behind Fiat with 23.5%, Volkswagen with 21.8% and General Motors with 19%. Fifth was Honda (HMC - Get Report), with 4%.

"Ford has been in Brazil since 1919, but was focused on the midsized and high-end segment of the industry," said de Oliveira. "In the last 10 years or so, we started to grow in the most important segment (small cars), which is about 65% of the market. That is where the biggest opportunity is."
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