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Customer LoginsArgentine light-vehicle registrations grow 14.4% in November 2016, rise 9.9% YTD
Argentine light-vehicle registrations totalled 55,691 units in November, according to the country's organisation of dealers, ACARA; year to date (YTD) registrations have reached 642,938 units as the year continues to outperform initial expectations.
IHS Markit Perspective
- Significance: Argentine light-vehicle registrations continued to climb in November, returning to double-digit growth at 14.4%. For the year to date (YTD), registrations have increased by 9.9%, according to the dealer association ACARA.
- Implications: Despite monthly volatility, Argentina has largely fared well in 2016 with consecutive and accelerating sales increases from February through May. A decline in June was followed by a more moderate uptick in July, the first double-digit rise for the year in August, and moderate growth in September and October. A trade agreement with Brazil has helped improve Argentina's sales despite vehicle price increases related to devaluing currency.
- Outlook: Through November 2016, ACARA's registration results indicate that the market has grown by 9.9%. The market's performance over the first three quarters of 2016 led IHS Automotive to raise its forecast for Argentina's 2016 sales. We now predict 2016 registrations will rise 5.3%, compared with earlier forecasts for declines of 5.2% and 9.7%. For 2017, we forecast growth of 3.8% as automakers push sales in Argentina to offset Brazil declines, followed by decreases of less than 1.5% in 2018 and in 2019; the country's sales are forecast to return to a growth trajectory in 2020.
Argentina's Asociación de Concesionarios de Automotores de la Repύblica Argentina (ACARA) has published its figures for November 2016 registrations, with a stronger gain than recent months. While on an overall upward trend, Argentine monthly results have been volatile in 2016. Registrations jumped 24.5% in May, followed by a contraction in June and a modest gain in July. With growth in the past four months, the year-to-date (YTD) registration figure is a 9.9% gain.
Ongoing effects of peso depreciation and economic and political instability have generally held the market back. Argentina was once pushing to become a 1.0-million unit market by 2016, which is not now expected to happen until after 2024; IHS Automotive now forecasts a natural replacement demand pace would be about 800,000 units per year, a figure we predict the market will not see until 2025. Passenger car registrations in November reached 39,034 units, or 70.0% of light vehicle (LV) sales (down from 71.5% a year earlier), and light commercial vehicles (LCVs) totalled 16,657. In November Argentine passenger-car registrations improved by 12.1%, with LCV registrations up 20.0%. Argentina remains a market heavily biased to passenger cars, although sport utility vehicle (SUV) registrations are making inroads. SUV registrations in November totalled 8,145 units, up 104%, with the SUV share of the market up from 8.2% in November 2015 to 14.69% in November 2016. YTD, SUV sales are up 59% to 77,959 units. In terms of segment, growth in C-segment SUVs has been the most dramatic, up 68.9%. The Renault Duster is currently the best-selling C-segment SUV in Argentina, with registrations of 19,573 units through November 2016. Ford's EcoSport is dominant among B-segment SUVs, although it has suffered registration declines with the arrival of fresh competitors, including the Peugeot 2008 and Jeep Renegade.
On an automaker level, Volkswagen (VW) has maintained a sales leadership from January to November, although Renault registrations outpaced VW registrations from June 2016 onwards. Through November, VW is ahead 3,655 units. In the YTD, VW's sales are down 8.8% and Renault-Nissan's up 24.9%. In August, Renault pulled ahead of General Motors (GM) in the YTD, and GM remains in third position. GM's registrations grew by 15.2% between January and November. FCA dropped to seventh in April, although it was pulled back to sixth in July and has stayed there.
The B-car segment remains by far the highest-volume segment in Argentina, making up 35.1% of November's light-vehicle (LV) registrations, although down from a 39.4% share in November 2015. The C-car segment came next with a 12.4% share in November (down from 15.5% a year earlier). Among more than 30 entries in the segment, the Renault Clio climbed to the top of the B-car segment in November 2016, with a 21.9% year-on-year (y/y) gain and 2,070 units sold. It was followed by the Fiat Palio, Renault Sandero, Chevrolet Onix, and Peugeot 208 - several of these vehicles have changed position month to month. YTD, the Fiat Palio retains the lead (28,078 units), followed by VW Gol, barely ahead of the Renault Clio, with 25,645 units sold to the Renault's 25,269 units. Exclusive of segment, the best-selling vehicle in Argentina in November was the Renault Duster sport utility vehicle (SUV), a new entry that racked up sales of 2,390 units. YTD, however, the Toyota Hilux retains the top position, followed by the Fiat Palio, VW Gol, and Renault Clio.
Outlook and implications
Through November 2016, ACARA's registration results indicate that the market has grown by 9.9%. The market's performance over the first three quarters of 2016 led IHS Automotive to raise its forecast for Argentina's 2016 sales. We now predict 2016 registrations will rise 5.3%, compared with earlier forecasts for declines of 5.2% and 9.7%. For 2017, we forecast growth of 3.8% as automakers push sales in Argentina to offset Brazil declines, followed by decreases of less than 1.5% in 2018 and in 2019; the country's sales are forecast to return to a growth trajectory in 2020.
IHS Automotive expects the market to move toward 755,000 light vehicles per year in 2023 as the economy stabilises. IHS Automotive considers that natural replacement plus population growth and GDP per capita put Argentine demand at about 800,000 upa. The YTD seasonally adjusted annual rates (SAAR) average is at 660,000 units, with third-quarter SAAR exceeding 700,000 units. Increases in vehicle pricing (pricing is up 36.2% y/y over the first two-thirds of 2016) seem not to be slowing the market. While vehicle prices are up 36.2%, there has been a 55% y/y currency devaluation and 47% inflation. We assume that new foreign exchange is starting to permeate to cars, but this may depend on when Brazil starts to grow again.
In June 2016, Argentina and Brazil entered into a new trade agreement, on a four-year term. The Argentine government resisted both a free-trade agreement and the increase Brazil requested to allow USD1.8 in imports for every USD1 exported, up from the current USD1.5. In the end, the USD1.5 figure holds through 1 July 2019. If both parties agree, it could be raised to USD1.7. Once this agreement ends in 2020, the two countries have agreed to shift to a free-trade agreement. The negotiations are in part driven by Brazil's efforts to increase its export base as its own market is in decline. It also illustrates that a broader agreement would benefit Brazil more than Argentina. There is less opportunity for Argentina to increase exports of assembled vehicles to Brazil than vice versa. Additionally, a lack of foreign currency had been restricting the importation of cars and components, reducing supply. The factors improving sales include the government's efforts to free up more foreign currency, to make vehicles available for the local market, and to offset some impact of plummeting exports to Brazil. Greater local availability has spurred sales.
In January 2016, a new government again revised the tax structure, reducing the burden for vehicle purchases. The changes provided a cut in excise taxes and trimmed the tax on cars costing more than ARS350,000 (USD26,500) from 30% to 10%. The tax on luxury vehicles costing more than ARS800,000 dropped from 50% to 20%. In 2014, higher taxes and the devaluing peso cut demand to 651,000 units and in 2015 sales suffered amid continuing higher taxes and negative conditions.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.