Can a Brazilian SUV Take on the Jeep Wrangler?

Can a stylish SUV made in Brazil take on the Jeep Wrangler in the rainforest and São Paulo's tony suburbs?

Automakers eyeing the flourishing Brazilian car market should take a look at what's going on in a quiet business park in the industrial town of Joinville. The story of a tiny Brazilian company, TAC, and its so-called urban vehicle, the Stark, holds some useful lessons for companies aiming to develop a promising product. Even before the roughly $50,000 car rolls off the assembly line next year, TAC has won prizes for innovation, including a gold in this year's IDEA/Brazil awards, sponsored by BusinessWeek.

Adolfo Cesar dos Santos founded TAC in 2002 after an industry group in the southeastern state of Santa Catarina challenged companies to create a vehicle using local technology and manufacturing expertise. A mechanical engineer by training and a keen off-road driver, dos Santos decided to make his hobby his business.

Given the competitive Brazilian auto market, dos Santos needed a niche. Since some 4x4s often can't handle rough terrain like the rainforest well, dos Santos hired product design firm Questto to create an upscale car that could take on the most challenging off-road exploration without skimping on urban driving comfort.

Some six years, 38,000 research and development hours, and five prototypes later, the hard-topped Stark emerged. Slightly smaller than a Jeep Wrangler, the sport-utility vehicle will make its debut next month at the São Paulo Auto Show. With its tubular steel frame and exterior made from vacuum-molded plastics (superlight and rust-proof), the Stark is at once familiar and exotic.

The car's creation was not without challenges. Given his own experience driving in daunting conditions, dos Santos found it hard to approve designs that didn't look rugged. "We had to remind him that this car was for the public, not for him," says Questto's director, Levi Girardi. Then Volkswagen (VLKAY) discontinued the flex-fuel engine, powered by ethanol or gas, that TAC had planned to use. So the company struck a deal with Fiat's (FIA) Brazilian unit, Fiat Powertrain (FPT), to install a 2.3-liter, 127-horsepower diesel engine, considered the optimal power source for off-road driving. An added bonus: FPT's 150 national dealers will have the option to sell the car, offering more distribution potential to tiny TAC.

Even with Brazilian consumer confidence and demand for cars growing, dos Santos says he's aiming for just 0.4% of the nation's SUV market, an estimated 233,000 vehicles next year. In 2009, 515 Starks will roll off TAC's assembly line. Dos Santos is hoping to nearly triple that number by 2014.

Success isn't a given. Rivals include Chrysler's Jeep Wrangler, which with taxes and import fees will have a higher sticker price than the Stark. But true to the spirit of off-road driving, negotiating such hurdles should be part of the fun.

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