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Customer LoginsArgentine light-vehicle registrations grow 3.1% in March, decline 1.5% in Q1
Argentine light-vehicle registrations increased by 3.1% year on year in March, though a double-digit decline in January has kept the first-quarter result to a 1.5% decrease.
IHS Automotive Perspective
- Significance: Argentine light-vehicle registrations gained 3.1% in March, though they declined 1.5% over the first three months of 2016, according to dealers' association ACARA.
- Implications: Argentina has started off 2016 with consecutive sales increases. A trade agreement with Brazil has helped improve Argentina's sales, though continuing declines in Brazil prevented that relationship from providing lift for Argentine exports. Brazil, looking to stop declines in its own production, has proposed a free-trade agreement, rather than a quota-based agreement, with Argentina and Mexico.
- Outlook: Through March, ACARA's registration results indicate that the market has contracted by about 1.5%; a decline in January of 14.8% had the most impact, as both February (up 9.0%) and March (up 3.1%) saw increases in registrations. While earlier in the year there was more optimism for Argentina, we have since revised our forecast; IHS now forecasts that 2016 sales will fall by 9.7% to 585,000 units. The setback is forecasted to be temporary, with growth returning from 2017 through 2023.
Argentina's light-vehicle registrations increased 3.1% year on year (y/y) in March, according to the latest figures from the Automotive Dealers' Association of the Republic of Argentina (Asociacion de Concesionarios de Automotores de la Republica Argentina: ACARA). However, registrations in January had declined sharply, and as a result, despite gains in February and March, in the year to date (YTD) the market was down 1.5% y/y.
The ongoing effects of the Argentine peso's depreciation and unstable economic and political situations are keeping the market back, after it was once pushing to become a 1.0-million-unit market by this year. Light-vehicle registrations in Argentina reached 48,594 units in March. Passenger car sales in March reached 37,052 units, or 76% of light-vehicle sales, and light commercial vehicle sales reached 11,542 units. March's results saw Argentine light-vehicle registrations reported by ACARA improve by 3.1%, with LCV registrations down by 11.6% and car registrations up by 8.7%.
In March and in the first quarter, Volkswagen (VW) was the best-selling OEM in the market, despite a 1.9% March decline in registrations. The company's registrations were down 11.5% in the first quarter. VW has, however, stayed ahead of General Motors (GM), which saw registrations grow by 39% in March and by 20.7% in the first quarter to 8,140 units and 25,179 units respectively. In third place was Fiat Chrysler Automobiles (FCA) with sales down 1.8% to 18,659 units for the quarter, but up 2.8% in March.
The B-car segment remains by far the highest-volume segment in Argentina, holding a 45.6% share of the March light-vehicle market registrations, compared with 39.1% in March 2015 and 42.5% in February 2016. The C-car segment came next with a 12.7% share of the market in March (down from 16.2% in the same month of 2015 and 13.8% in February). With more than 30 entries, the best-selling B-car in March 2016 − in fact, the best-selling vehicle − was the Chevrolet Corsa Classic, followed by the VW Gol, Fiat Palio, and Renault Clio. The Chevrolet had nosed ahead of the VW for top sales parent in January, but fell back to second place in February and regained its place in March. The two are likely to switch positions throughout the year.
Outlook and implications
Through March 2016, ACARA's registration results indicate that the market has contracted by about 1.5% y/y; a decline in January of 14.8% had the most impact, as both February (up 9.0%) and March (up 3.1%) saw an increase in registrations. While earlier in the year, there was more optimism for Argentina, we have since revised our forecast; IHS now forecasts that 2016 sales will fall by 9.7% to 585,000 units. The setback is forecasted to be temporary, with growth forecasted in 2017−23.
IHS is now reporting on the monthly Argentine light-vehicle market performance using the ACARA data; a review of the data from Argentina's Association of Automobile Manufacturers (Asociación de Fábricas de Automotores: ADEFA), which includes production and export figures, will be issued once those figures are available. Argentine vehicle registrations closed 2015 down 6.0%, improved by increases during the fourth quarter. IHS Automotives sales data, which can differ from registration data presented here, show that Argentina's sales were essentially flat in 2015, being down 0.2%.
Argentina fared much better than initially expected in 2015. It started off the year with a SAAR (seasonally adjusted annual rate) of sales below 500,000 units, but quickly crept up towards 600,000 units at the end of the first quarter; in the last quarter of 2015, the SAAR of sales broke the 700,000-unit mark. Exports plummeted given the drastic slowdown of Brazilian sales and freed up more foreign currency to make vehicles available to the local market, a factor that appears to be continuing into 2016. The Argentine peso's exchange rate of ARS8.5:US1.0, along with taxation, strains consumers by making cars even more expensive, and drove the decline in 2014 and held sales flat in 2015. The effects of the currency depreciation are expected to last in the short term. While we were more bullish on the country's performance on changes that new president Mauricio Macri made, we revised our outlook with the March sales forecast. This downward revision is due to concerns of increases in vehicle pricing and potential lame-duck conditions for Macri until congressional elections occur in two years.
In February 2016, Argentina and Brazil opened up talks to renegotiate a free-trade agreement, rather than the quota system existing now. However, as Brazil's market continues to decline, the Argentine government is resisting both a free-trade agreement and a request from automakers for an increase to allowing USD1.8 in imports for every USD1 in exports, up from today's USD1.5. The negotiations are in part driven by Brazil's efforts to increase its export base; the declining market has caused production declines in that country. The current quota-based system was extended in June 2015 through June 2016, and remains in place. 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. One of the factors improving sales is the government's efforts to free up more foreign currency, to make vehicles available for the local market and offset some impact of plummeting exports to Brazil. With more local availability, sales have been positively impacted. Argentina's ProCreAuto II, a financing programme aimed at stimulating sales, was extended through January 2015, with a smaller list of eligible vehicles. A third round was considered but never implemented.
Argentina updated the tax structure in 2015 to account for inflation, and it was also designed to hinder imports and the flight of dollars, as the conversion of US dollars to pesos resulted in the government running short of dollars in its foreign reserves. The minimum cap had been raised by 15%, with a 30% tax level applied to vehicles priced in the ARS195,500-241,500 range, before tax; vehicles below the threshold were taxed at 10%. The 50% tax level applies to vehicles that cost more than ARS241,500 before taxes and profit. In 2014, the structure impacted vehicles priced at more than ARS170,000, which meant that the impact was most significant in the C, D, and E segments. Notably, pick-ups are exempt from the tax.
In 2016, however, a new government has again revised the structure. Excise taxes are reduced, the tax on cars costing more than ARS350,000 (USD26,500) has fallen from 30% to 10%, and the tax on luxury vehicles costing more than ARS800,000 has dropped from 50% to 20%. The change was implemented in mid-January, though it did not have as large an impact as expected. In 2014, the higher taxes and devaluing peso reduced demand to 651,000 units, and continuing negative conditions pushed sales down in 2015 as well. A quick recovery is unlikely, with a decline in the first quarter of 2016 indicative of the expected performance of the year.
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.