The Argentine automotive industry faced contrasting situations in February.
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Production and exports were strong, but domestic market sales were down, highlighting the biggest problem facing the local industry: high sales of imported vehicles.
According to the Argentinean National Automaker’s Federation (Adefa), automakers last month sold 35,833 vehicles, off 8.8% compared with the 39,270 units sold in January, but a healthy year on year rise of 31.8%.
But only 37.9% of the vehicles sold last month were produced locally. That was an improvement on the 33% share that Argentine-made vehicles achieved in February 2005, but is not enough yet to please the government.
Brazil is, in fact, the principal supplier of vehicles to Argentina these days. The best-selling model there is the Brazilian-made Volkswagen Gol.
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By GlobalDataAs a result, Argentine politicians want to ‘incentivise’ the production of new models in the country to help exports and give buyers more locally-built vehicle models to choose from.
The principal strategy is defined in new rules agreed with Brazil for the Mercosur automotive trade agreement.
Initially, under the agreement, this year was supposed to mark the start of automotive free trade in the region but Argentina last year refused to go along with this new rule.
Consequently the start of the new regime was extended until 30 June and the two countries are currently negotiating a new agreement.
Currently quotas control the number of vehicles imported into Uruguay and Paraguay but Brazil and Argentina have agreed a so-called ‘flex’ arrangement keeping the tax-free volume at a “balanced and proportionate” level.
Under the ‘flex’ deal, a country can export $US1 of vehicles and equipment to the other country for every $US2.6 imported.
The Argentinean government wants to postpone the start of free vehicle trade indefinitely and to maintain the basis of the current rules, but with “flex” on a company basis.
Its politicians are now trying to force automakers and parts makers to produce in both Argentina and Brazil.
This situation today is quite different from recent years, when automakers and components suppliers focused their investments on Brazil, the largest market in South America.
Fiat and Scania, for example, stopped making vehicles in their Argentine plants in recent years and based all production in Brazil.
While the outcome of negotiations is awaited, sales of Argentinean-made vehicles to other countries have increased considerably.
In February, local automakers exported 12,793 units, up 148% compared with the 5,155 units shipped in January and up 42% year on year.
Strong export sales boosted Argentine output 137.1% in February to 29,271 units, compared with January. Year on year output rose 127%.
Rogério Louro
