MercoPress. South Atlantic News Agency

Argentina expects another car production record next year: a million units

Anibal Borderes admits competitiveness is a challenge since 90% of all exports are shipped to Brazil

The Argentine automobile industry will expand its production capacity to a million units annually by 2012 following on the expected record production of 840.000 this year boosted by domestic demand and exports to brazil, said Anibal Borderes president of the country’s Automobile Manufacturers Association, Adefa.

Argentina’s last production record was in 2010 with 724.033 units.

“The year 2011 is advancing at a great rate, we are breaking production and sales records month after month, so this year we are also expecting a record in sales and exports”, said Borderes.

In any case the lack of a well oiled credit system to sell cars impedes a faster expansion of the industry admits Adefa president. In Argentina only 25/30% of sales of brand new cars are on credit contrary to what happens in neighbouring countries where 70/80 months financing of 70% of the value is common.

Borderes said that a slight slowing down of the Brazilian economy should not affect ‘very strongly’ Argentine manufacturers. “Obviously any slowdown means a yellow light, but we shouldn’t suffer a great impact”.

However one of the challenges for the Argentine car industry is increasing competitiveness particularly at the moment when inflation is running at over 25% annually.

“The exchange rate with Brazil is competitive, but with other countries we must work hard. We don’t measure the foreign exchange whether it’s up or down, for us what matters are our costs in Argentine pesos, so we must look closer at domestic efficiencies and productivity”, said Borderes.

The industry has planned investments of 1.2 billion dollars until the end of 2012. The auto industry represents 1% of Argentina’s GDP and 6% of the manufacturing GDP. Almost 60% of Argentine car production is exported to 44 countries but Brazil’s share is 90%, followed by Mexico. Automobile overseas sales are equivalent to 13% of Argentina’s total exports.

Globally in car manufacturing Argentina ranks in position 20 and Brazil fourth and is expected to move to third place by 2017.

Anibal Borderes admits competitiveness is a challenge since 90% of all exports are shipped to Brazil