MercoPress. South Atlantic News Agency

Argentina auto industry vows export surplus in 2012 after a 6 billion USD deficit in 2010

Ford was the last company to accept Industry Minister Debora Giorgi policy

Ford Motor Argentina is the latest carmaker to sign an agreement with the government to boost exports to compensate for increased imports. Ford has vowed to boost its export surplus to 90 million USD by 2012, the Economy ministry said in a press release Monday. That follows a deficit of 250 million USD in 2010.

The Argentine government has put pressure on auto manufacturers to help maintain a wide trade balance despite soaring demand for imports.

Ford executives are committed to increase exports 70% next year with new models and to increase imports by no more than 30% by boosting domestic manufacturing, according to the ministry.

The agreement comes three weeks after Ford was fined 1.3 million USD by the tax agency Afip for allegedly failing to accurately declare auto parts that were imported from Brazil.

Ford is the latest of a long list of carmakers to sign similar agreements with the government, which has imposed the ‘dollar for dollar’ scheme making companies balance any imports with corresponding exports.

The local units of General Motors, Volkswagen, Daimler Benz (which includes Porsche), Fiat, Peugeot Citroen and Fiat's Alfa Romeo have also agreed to the deals, according to the ministry. Most of the companies vowed to export more cars or parts, but Porsche, which doesn't manufacture cars in Argentina, agreed to export wine and olive oil to balance out the 100 vehicles it plans to bring in this year.

In April, Germany's BMW said it would stop importing cars to Argentina due to restrictions. BMW sold around 3,500 vehicles in Argentina in 2010, according to data from the Argentine automotive dealers association, which was up 60% from 2009.

The agreements with the other carmakers will lead to an export surplus of 4 billion USD next year for the vehicle industry, compared with a deficit of almost 6 billion USD last year, Industry Minister Debora Giorgi said in the release.

Despite the government measures, the carmakers are on track to set records for production, exports and domestic sales this year as they benefit from booming economic growth in the region and runaway inflation in Argentina, which has led consumers to pour cash into durable goods like cars as a hedge.

During the first four months of the year, vehicle production was up 27.8% on the year, according to vehicle manufacturers chamber Adefa. During the first four months of the year, exports were up 32.4% on the year, with the vast majority shipped to neighboring Brazil, where demand has surged over the past year.

In 2010, Argentina ran a 12.06 billion USD trade surplus thanks to high prices for its grain exports and strong demand for Argentine manufactured goods in Brazil. The policy has angered Argentina’s two main trade partners, Brazil and China.