For automakers in Latin America, the next five years may feel like 20.

The region that initially held so much promise has seen a year of plummeting sales and production. But experts agree that South America has not lost its potential. Twenty years down the road the region could be awash in boom times again.

Meanwhile, there's reason for worry in the short term. Latin America's vehicle sales in 1999 have fallen to their lowest level since 1992. Production slipped 20% in Brazil and 43% in Argentina, which was hit the hardest by the crisis in the automotive sector. It is a year everyone would like to forget.

But there are hopeful signs. Brazil's interest rates are expected to ease down early next year, spurring sales of 1.3 million units. By 2003, the market should see 2 million sales. "The long-term potential for Brazil looks good," says Marnie Andrews, Latin America analyst for the Economist Intelligence Unit.

Small-car sales will continue in the Brazilian market. There also will be a movement to monospace vehicles and cars in the small- to medium- C and D segments. That includes Ford Focus, Fiat Bravo/Brava and the Renault Megane. Sport/utility vehicles also will see some growth, along with car-derived vans.

In Argentina, the recent presidential election added stability, but like Brazil, growth is in the future. The economy is expected to pick up next year and continue improving at least through 2003. Vehicle sales should hit 500,000 by then. The country also will see many of the same vehicle trends as Brazil.

Some foreign automakers, however, are taking a wait-and-see attitude, putting future investment in Argentina on hold. Volkswagen AG is delaying Passat production, while General Motors Corp. not only is delaying investment but also recently said it will shut down its truck plant in Cordoba and move production to Rosario, Brazil. "There are a lot of worries about Argentina," Ms. Andrews says.

Experts will continue to be concerned with Venezuela and Colombia, as well. The latter, which has only 18 people per vehicle, will see gradual recovery after 2000, but the country's macroeconomics do not support vehicle growth. Chile, where pricing is a disaster, continues to be a headache for OEMs.

Still, Ms. Andrews believes the long-term picture is positive and that manufactures are in Latin America for the long haul.One of those committed to th e region, particularly to Brazil, is Ford Motor Co. Even though Ford has seen increasing losses, slowing sales, labor problems and reduced production, it plans to persevere. "The long-term potential is there, but it will not be for the faint of heart," says I. Martin Inglis, former president of Ford South American Operations and recently named president of Ford North America.

Ford is building a small-car plant in Bahia, as well as restructuring its Latin American operations to increase profitability. "We still believe the market has enormous potential and can be profitable," Mr. Inglis says.

While making changes within its own local structure, Ford, along with other automakers, hopes for changes within the government. "We need creative solutions to our problems," Mr. Inglis says, noting trade liberalization and tax restructuring are needed.

Additionally, linking the Mercosur countries with neighboring nations to create a South American Free Trade Agreement (SAFTA) would bring positive results. South America's exports to the rest of the world also must increase, he says. Automakers must support the evolution of trade in the region.

"There is still a lot of opportunity in Mercosur to increase cross-border trade," Mr. Inglis says. Most importantly, Mercosur must continue and must work.

Cristiano Rattazzi, president of Fiat SpA's Argentina operations, says Mercosur will continue in some form but will see changes. Argentina does not want complete free trade with Brazil, which would like to see zero tariffs by 2003. But the lack of tariffs eventually could close all auto plants in Argentina. "Argentina will protect itself with trade (barriers)," Mr. Rattazzi says.

Even with a new Mercosur agreement, there would be some casualties in Argentina. Mr. Rattazzi expects several plants to be closed, with eventually only three or four assembly plants building cars. "I don't see 11 plants in Argentina," Mr. Rattazzi says.

Even without a new Mercosur agreement, capacity in the region will continue to increase dramatically, from 2.6 million units this year to 3.1 million in 2003. Demand in 1999 will be 1.2 million to 2.1 million vs. demand in 2003 at 1.2 million to 2.5 million units. That's 35% overcapacity. Says Mr. Inglis: "It's going to be survival of the fittest."