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Montevideo, May 25th 2019 - 23:33 UTC

Argentina's recovery fuels car sales

Wednesday, December 20th 2006 - 20:00 UTC
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Vehicle sales in Argentina rose a healthy 17 percent to 453,000 units in January-November – the higher figure since the 455,000 sold in the entire 1998 — on the back of a steady economic recovery accompanied by a favourable international scenario, the new chairman of the ACARA concessionaires association Dante Alvarez said.

Sales are expected to hit a record of more than 500,000 vehicles next year as the country's economy continues to grow soundly after having grown an average nine percent over the last four years, leaving behind the crippling 2001-2002 crisis. In 1994 a record of 508,000 vehicles were sold. The crisis meant that concessionaires declined from about 1,300 last decade to about 570 now, a "more logical figure," Alvarez told reporters at a dinner on Tuesday where he was presented as the new ACARA head. "We are selling about the same number of vehicles than in 1994 and 1998, only that due to a strong tax pressure more sales are needed now to attain a profitability similar to that before the crisis." Of total sales, 40 percent was accounted for domestic manufacture and 60 percent for foreign vehicles, with Brazil accounting for 89 percent of that 60 percent. Alvarez said that more national vehicles should be sold. "Some argue that for concessionaires it is the same to sell a local or a foreign model but we in ACARA are staunch advocates of fostering the national industry. "To import vehicles, large amounts of foreign currency are needed and countries are not always in a condition to spend them. Hence, regular supplies would not be ensured. We, the concessionaires, need predictability." Furthermore, Argentine vehicle prices are lower than those in Brazil, he said. Car industry sources said that considering that Brazil is the world's seventh largest economy, the 40 percent participation of Argentine manufacture in domestic sales was not actually bad. Heavy vehicles accounted for eight percent of total sales in January-November versus 7.3 percent in the same period year ago. According to the ADEFA vehicles manufacturers lobby, in January-November production rose 32 percent to 392,000 units from 297,000 in the same period of last year, sales grew 12.9 percent to 419,000 from 371,000 and exports shot up 28.7 percent to 215,000 from 167,000. Argentina's car manufacturing sector has an installed capacity of one million units per year. In January-November 1.2 million used cars were sold. Second-car sales account for no more than 20 percent of concessionaires' sales, Alvarez said. He added that next year's record sales is expected despite financed sales this year accounted for only 28 percent of the total sales versus 70 percent financed sales in the 1990s, when Argentina's car industry boomed. Of the 28 percent financed sales, 20 percent was accounted for traditional savings and eight percent for savings plans. Financing could grow to about 35 to 40 percent next year, unfazed by the fact that presidential elections are due in October, Alvarez said. Many observers expect President Néstor Kirchner to run and possibly be re-elected for four more years in the face of a highly dispersed opposition. Leading sales this year was Germany's Volkwagen (84,000 units,) followed by US' General Motors and Ford (nearly 62,000 each,) France's Renault (47,000) and Peugeot (44,000,) Italy's Fiat (42,000,) Japan's Toyota (21,000,) France's Citroen (14,000,) Germany's Mercedes Benz (11,000) and Japan's Suzuki (10,000.) The most sold model was Volkswagen Gol (which is made in Brazil,) followed by General Motors' Chevrolet Corsa (35,000,) Peugeot 206 (23,000,) Renault's Clio (19,000,) Ford's Ecosport (16,000,) Fiat Palio (15,000,) Ford Fiesta (15,000) and Peugeot 307 (11,000.) All Fiat's models were imported as the company four years ago discontinued vehicle production in Argentina. Still, it continues to manufacture engines, gear boxes and other components in Argentina. The average price for cars and light vehicles in January-November was about 44,400 pesos, resulting from Volkswagen's 41,000, Chevrolet's 42,000, Ford's 47,000, Renault 42,000, Peugeot 49,200, Fiat 32,700, Toyota 80,500, Citroen 50,600 and Suzuki 29,500. "I think that in dollar terms vehicles sell at lower prices than before the crisis. But regarding the price-purchasing power ratio there is still room to recover the levels of last decade," said Alvarez. He added that the price of some models rose up to eight percent this year but also that some discounts were subsequently applied. "Next year there will be more cars than buyers and hence a cautious price policy is advised." The medium-sized car sector is growing, with 30/35 percent of total sales, and its participation could rise three or four percent next year, Alvarez said. Diesel-powered cars were sold more in the hinterland and gasoline-powered more in Buenos Aires. Some problems with the supply of diesel fuel this year made that some sales of diesel cars that had already been agreed were swapped into gasoline vehicles. Diesel motors performance is increasingly comparable to gasoline motors. "Peugeot will make a debut with a diesel-powered car in Le Mans," Alvarez said. Under an agreement wit ACARA, the mechanics union SMATA received salary increases above inflation and no problems with the union should be expected next year, Alvarez said. ACARA is discussing with ADEFA ways to renew the country's obsolete public transport network. Separately, ACARA is in talks with authorities on how to drive down road accidents that killed so far this year 6,600 people â€" one of the world's highest fatal ratios considering Argentina's population of 38 million people. (Most figures in this report have been rounded. Over the last few years the peso has been quoting to about three to one dollar.) By Guillermo Háskel - MercoPress â€" Bs. Aires

Categories: Investments, Argentina.

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