SAO PAULO -(Dow Jones)- Top executives at General Motors in Brazil can't seem to say it enough - Detroit's problems aren't Brazil's problems.
In fact, as General Motors (GM) teeters on the edge of financial collapse, its Brazilian subsidiary is expecting to sell 15% more cars this year than last.
"We are not dependent on the U.S. in any way," said GM's chief executive in Brazil, Jaime Ardila.
And what happens if General Motors in the U.S. files for Chapter 11 protection from lenders?
"It's not part of corporate's plans to file for bankruptcy, so we're not going to speculate," Ardila said.
In the U.S., the chairmen and CEOs of GM, Ford (F) and Chrysler met with the U.S. Senate Banking, Housing and Urban Affairs Committee Tuesday to mount what many see as a long-shot bid for a $25 billion rescue package. Another meeting will take place Wednesday.
Brazil's GM unit is an entirely different machine from its Detroit parent.
The company's Brazilian headquarters are in Sao Caetano do Sul, a suburb of Brazil's biggest city of Sao Paulo. Its large lot employs 11,333 engineers and administrative staff out of a national total of 23,874. The main administration building looks like an old Portuguese colonial school house, with concept cross- overs, sedans and electric cars parked just outside.
General Motors do Brasil Ltda is a separate legal entity from its parent in Detroit and, as such, wouldn't go bankrupt along with headquarters. It sends regular profit payments to the U.S. each year, but the main office has yet to request a larger stake than in the past in Brazil's booming profits.
For much of the late 1990s and up until 2005, the Brazilian subsidiary was dependent on GM loans to stay afloat. But new car models and expanding credit for working class Brazilians changed the scenario here.
"We don't need to tap Detroit for a single dime," said Jose Carlos Pinheiro Neto, GM's Brazilian vice president.
Unlike the U.S., the only GM brand in Brazil is Chevrolet. It trails Volkswagen and Fiat in national sales.
In October, GM sold a little more than 36,000 light vehicles compared with 168,000 light vehicles sold in the U.S.
Brazil is part of GM's growth story, along with China and other emerging markets. Some 60% of GM's total car sales come from outside North America, Ardila said.
"If there is ever a problem in the U.S., GM is not going to force cuts in investments in the one part of the world that is making them money," Ardila said.
But if GM doesn't get a comprehensive U.S. government bailout, then bankruptcy could be just around the corner, said Bill Mann, an automotive analyst at the Motley Fool in Virginia.
"If they are not bailed out, you're looking at about a 90% chance that GM files for bankruptcy. There is nothing in Brazil for them to spin-off, because all they have is Chevrolet, so in a worst-case scenario they could take on a strategic partner, or sell a percentage of profitable assets to another company, " Mann said.
One person close to General Motors in Detroit said the company needed around $ 11 billion within three months just to stay afloat.
"If it doesn't get it, the repercussions will be industry-wide and global. I've never seen anything like this in the sector and I'm really concerned about the company's future," that person said.
So far, General Motors do Brasil's biggest problem has more to do with Lehman Brothers (LEH) and Bear Sterns than its parent company.
The credit crisis has led to a liquidity squeeze in Brazil. Automakers aren't getting bailed out, or even asking for government aid. But the Brazilian government did recently pump more than 8 billion Brazilian reals ($3.47 billion) into the auto loan market through government banks.
General Motors do Brasil now expects 2008 revenue to come in around BRL9.5 billion, compared to earlier estimates of BRL11 billion as a result of the squeeze.
Yet, the company has had two of the best years in its 84-year history in Brazil, while Detroit trails its Japanese competitors.
"People are starting to make too big a deal out of how GM in the U.S. is going to impact GM in Brazil," said Andre Beer, former vice president of GM in Brazil and now a consultant in Sao Paulo.
"GM is independent from an operational standpoint. It develops its products locally, for a local market, and all of its suppliers are here. Nothing is imported," Beer said.
"I wouldn't use the word 'safe' from Detroit's problems, but we are much more comfortable than the U.S. and Europe," Beer said.
Analysts like Mann also said Chevrolet models in Brazil are more price competitive than Chevy models in the U.S.
"GM's role in Brazil and other emerging markets will become much bigger," said Vitoria Saddi, a Latin America analyst at consulting firm RGE Monitor, owned by economist Nouriel Roubini.
"It's hard to compare GM in Brazil to GM in the U.S. because consumption patterns are so different, but no matter how well Brazil's unit performs, problems with Detroit put GM in Brazil in a very uncomfortable situation whether they like it or not," Saddi said.
-By Kenneth Rapoza, Dow Jones Newswires; 5511-2847-4541; kenneth.rapoza@ dowjones.com
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11-18-08 1409ET
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