South America’s auto industry stumbled badly last year and now is looking for ways to right itself. But in doing so, a tectonic shift is taking place as auto makers move away from the traditional Mercosur trade bloc countries and toward more promising markets. Chile’s economy, for example, is accelerating sharply this year as a free-trade agreement with the U.S. takes effect and exports strengthen. The country now is seen as an attractive market for auto makers as Argentina and ...

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