Driving to salvation--or disaster. (Industry Trends).

The recently released study, The Impact Of Mercosur On the Automobile Industry concludes that the sector has become a pillar of the Southern Cone economy. But reforms will be needed for the industry to thrive in an increasingly competitive global marketplace. The following are excerpts from the study.

A TRANSFORMATION of the automotive industry, particularly the segment involved in production of finished vehicles, has taken place in the Southern Common Market, better known as Mercosur. This is a vitally important development, considering how key the auto industry was in advancing Western economies during the 20th century. The automobile industry also constitutes an important underpinning for the efforts to achieve economic integration in Mercosur.

A Brief History

The automotive industry in South America has its historical roots in a small factory set up in Buenos Aires at the beginning of the century by Argentine entrepreneur Horacio Anasagasti, who began assembling simple vehicles using Bleriot auto parts from France. Ford set up its first South American plant in Argentina, in 1916, followed by plants in Chile, Brazil and Mexico during the 1920s. General Motors and Chrysler followed suit during the 1920s and 1930s. By 1930, Argentina had one of the highest automobile densities in the world--higher than most European countries.

After a …