MercoPress. South Atlantic News Agency

Car sales in Argentina plunged 28% last year compared to 2013

Last year’s total reached a poor 683,485 cars registered, when compared with the 956,884 units sold in 2013, a record for Argentina.

Sales of new cars in Argentina plunged 42% in December, compared to the same month of 2013, a steep drop that managed to raise eyebrows in an industry that had gotten used to declines month after month. It was steeper than the already strong 37% drop seen in November.

 Overall though, new car sales last year dropped 28% when compared with 2013, according to the ACARA association of auto dealerships.

A mere 29,167 units were sold in December, pushing the year’s total to an also poor 683,485 cars registered, when compared with the 956,884 units sold in 2013 — a record for Argentina.

The poor 2014 for the Argentine auto industry began late in January, after the Central Bank led by Juan Carlos Fabrega stopped selling dollars and there was a steep devaluation as the official Peso-dollar rate went from 6.9 to 8 Pesos.

This reduced the purchasing power of potential buyers, which had been rising in previous years as the frozen exchange rate meant salaries were worth more, making the auto sector’s goal of reaching one million units sold in a year impossible to reach.

Although the Argentine car sector has been complaining about the luxury car tax’s effects on costs as another reason behind the drop in sales, estimates from the Economy Ministry note that, as of March 2014, it only affected four percent of the vehicles available to the public. That tax only started being a bigger weight on the sector later in the year, when prices rose but the value of what was considered a “luxury” car remained frozen.

Recently, the government increased the price floor at which cars are considered part of a “luxury” sector by 15%, a move ACARA said would not be enough to restore demand.

In an effort to stimulate the sector, the government of President Cristina Fernandez also launched the Procreauto plan in June, offering credits at subsidized rates to improve access to cars, but factories have not been able to keep up with that demand throughout the year.

ACARA president Abel Bomrad said that “despite the problems that we’ve gone through, it is fair to say that the Procreauto plan helped to end the year with more than 680,000 units sold.”

The Argentine car industry has been in a year-long conflict with the government due to delays in authorizations to import spare parts, as the Central Bank is trying to preserve its dollar reserves from purchases of a speculative nature, which bet on future devaluations that would increase the value of those parts.