Argentinean automotive industry growth was healthy in the first half of this year.

According to the Argentinean National Automaker's Federation (Adefa) 143,203 vehicles were produced, an increase of 26.9% compared with 112,889 in the first half of last year.

Local sales were stronger than production with growth of 33%. Compared with 147,806 vehicles sold in H1 2004, automakers sold 196,560 units in 2005.

Adefa expects 390,000 or 400,000 vehicles to be sold in 2005 and that would be the best annual sales result since 1998. Last year, 311,961 vehicles were shifted.

Volkswagen led the Argentine market in the first half, selling 40,494 vehicles for 20.6% market share, including cars, light commercials, trucks and buses. Ford was second with 30,519 units and 15.5%. Chevrolet sold 28,402 units and took 14.4%.

Exports also increased in the first six months of 2005. 76,550 vehicles were shipped, a rise of 31.8%.

Despite strong homes market sales and export growth, the Argentine government is dissatisfied with the vehicle trade balance because only 35.8% of vehicles sold in H1 2005 were locally-made.

It is considering ways to incentivise sales of Argentine-made vehicles.

One idea is to give tax incentives to local automakers who buy Argentine-made components. Politicians hope to attract new investment and reduce production costs and, consequently, reduce prices of locally-made vehicles.

The government is also mulling a way to limit the automotive free trade agreement with Brazil. More than 60% of imported vehicles sold in Argentina came from the neighbouring South American country and politicians want to reduce this using quotas or an agreement to balance trade.

Rogerio Louro