MercoPress. South Atlantic News Agency

Cars registered in Argentina during January drop 39% over a year ago

IHS Automotive is expecting 2015 sales in Argentina of roughly 500,000 units, because the country is displaying hints of the “tango crisis” of 1998

The number of cars registered in Argentina during January dropped 39% in comparison with the same month last year, ACARA, the chamber that groups Argentine car dealers, has revealed.

 According to the chamber, 65,550 units were registered throughout the first month of the year. This means a 117% growth compared to the 30,101 registered last December, but a significant drop compared to the 108,101 units registered in the same month last year.

However ACARA head Abel Bomrad said the drop registered “does not represent the real level of activity in the sector.”

“In January 2014 a great number of units were registered but were bought previously in November and December of 2013, so the comparison between January 2015 and 2014 does not show the real level of activity in the sector,” he explained.

Describing the South American automotive market, IHS Inc from Denver Colorado says there was a stark change in 2014 demand compared to 2013, when monthly sales broke the 500,000 unit mark seven times. The year preliminarily closed with 5.34 million units – a 10% drop from 2013; with politics impairing Argentina and Venezuela, and the economic climate weighing down markets like Brazil, Chile and Peru, where it may take a few years for demand to recover to previous highs.

Furthermore uncertainty lingers over Argentina, Brazil, Chile and Venezuela for 2015. Argentina is displaying hints of the “tango crisis” of 1998: uncontrolled inflation, lack of foreign currency and risk of devaluation.

As a result, IHS Automotive is expecting 2015 sales in Argentina of roughly 500,000 units. In Brazil, banks have been tightening credit for the last three years, and they are not showing interest in boosting credit to the automotive sector. This, along with the increase in the IPI (an industry tax) in early January, higher financing rates and weak job generation should translate into sales in Brazil of 3.25 million units.

In Chile, doubt over car sales is drawn from the emissions tax and the risk of further currency devaluations will ring in the market close to the 300,000 unit mark. Finally, it is difficult to imagine the Venezuelan market tumbling any lower than it already has; however, as oil prices plummet, the government’s access to foreign currency will continue to be limited, thus impairing vehicle production.