Differently-powered cars were actually in the majority on Brazil's roads at the time, marking a major technological feat.

But the programme that had put the country so far ahead was very nearly consigned to history when oil prices slid back from high levels seen in the 1970s.

Alcohol-powered cars fell out of favour and languished in obscurity until last year, when production picked up again in a big way.

[...] Brazil’s state-run alcohol fuel programme was set up for patriotic, not financial or environmental reasons. The military government that ran the country from 1964 to 1985 wanted to reduce its dependence on Middle Eastern petroleum during the 1970s oil crisis.

[...] As a result, in 1985 and 1986, more than 75% of all motor vehicles produced in Brazil - and more than 90% of cars - were designed for alcohol consumption.

But then it all went wrong.

[...] A new generation of alcohol-powered cars entered production in Brazil in 2003, after the government decided that cars capable of burning ethanol should be taxed at 14%, instead of 16% for their exclusively petrol-powered counterparts.

Unlike earlier models, these are “flex-fuel” cars—equally happy with pure alcohol, pure petrol, or any blend of the two.  In 2004, the first full year that flex-fuel cars were on sale, they accounted for more than 17% of the Brazilian market, and are on course for an even bigger share this year.

A good quick backgrounder, and worth reading in its entirety.

(A hat-tip to Robert S.!)