Analyses
13 fév 20

Argentina auto market takes hard hit as economy drags

With Argentina’s inflation and interest rising well into double digits and its currency weakening significantly last year, Latin America’s third largest automobile market took a major hit in 2019.

While car and light commercial vehicle (LCV) production was down 33% year-over-year, dealership sales dropped 45% and exports slid 17%. Below is a snapshot of the country’s performance during the 12-month period.

A total of 314,787 cars and LCVs were produced in 2019, down 33% year-over-year. Most of the production was for LCVs such as pickups and vans. While 108,364 cars were produced last year, a total of 206,423 LCVs were built, according to the country’s vehicle manufacturers association Adefa.

Dealership sales totaled 372,474 units, down 45% from the previous year. While 282,299 cars were sold, 90,175 LCVs left showrooms.

Meanwhile, 224,248 cars and LCVs were exported during the 12-month period, down 17% year-over-year. Most of them were exported to Brazil (67%), followed by Peru (5.9%) and Colombia (4.7%). A total of 68,090 were cars and 156,158 were LCVs.

Vehicle Supply Chain (2019)

Production

314,787 units

down 33%

Dealership sales

372,474 units

down 45%

Exports

224,248 units

down 17%

                                  source: Adefa 

“As most car sales go to the retail market in Argentina, economic depression, middle-class impoverishment and high interest rates are critically impacting car sales, a market which was cut my nearly a half last year,” says Fleet LatAm advisory board Pascal Serres.

Regarding new registration, 440,330 new car and LCVs were licensed in 2019, being 43% less than the year before. A total of 333,262 were cars (down 45% year-over-year) and 107,068 were LCVs (-34%), according to local automobile association ACARA.

Car Registrations

Volkswagen

68,818 units

down 41% year-over-year

Toyota

65,065 units

down 29% year-over-year

Renault

63,389 units

down 45% year-over-year

                                  source: Dataforce
According to consultancy firm Dataforce, 266,000 of the new car registrations last year were for private sales (58% of the 459,592 total), leaving 193,592 units for the corporate market.

In terms of car models, subcompact hatchbacks lead the pack. Ford Ka tops the chart with 16,630 units registered, followed by Chevrolet Onix (16,541 units) and Toyota Etios (15,748). Some of the passenger car models popular for corporate use are the Toyota Corolla and Ford Focus sedans.

Meanwhile, boasting 25,120 units, the Toyota Hilux pickup was the best-selling LCV as well as the best-selling vehicle overall in the country last year, according to Wikifleet Argentina. Other LCVs doing well were the Volkswagen Amarok pickup with 12,660 units sold and Ford Ranger with 11,635.

Coming into the new year, Argentina’s benchmark interest rate was 50% and inflation approximately 53%, and the country’s unemployment rate dropped to just under 10%. Meanwhile, although the country reported negative GDP growth in the first semester of 2019, it started showing improvements in the second semester and should see 2019 GDP similar to the US$519 billion posted in 2018 (US$11,585 per capita).

A recovery, however, is not expected by all. Although congress approved an emergency bill in December (2019) to raise fiscal resources while protecting the most vulnerable, the IMF has forecasted a contraction of the economy in 2020 (PIB: -1.3%) for the third consecutive year, according to Mr. Serres.

With this information, “It is difficult to imagine a recovery in car registrations in 2020,” says the executive.

Pascal Serres talks at Fleet LatAm Conference 2019 in Mexico City (source: Fleet LatAm)

Authored by: Daniel Bland