MercoPress. South Atlantic News Agency

Car sales in Argentina plunge; worst February since 2009

The drop in the auto industry began after a combination of higher taxes on cars and a devaluation of the peso hit the purchasing power of potential car-buyers

The second month of the year marked another negative result for auto sales in Argentina, which dropped 28% compared to February last year, showing how the sector’s downward trend appears to have no end in sight. Only 41,998 vehicles were sold last month, according to the ACARA Argentine car dealership association, the lowest figure for the month since 2009.

 In the previous three years, February sales had shifted within the 58,000-63,000 range. The accumulated total for the first two months of the year puts sales at 108,870 units, 35% below 2014, but ACARA’s president said that drop needed to be put into context.

According to Abel Bomrad, the early 2014 figures with which the most recent numbers are compared were still part of the auto industry’s boom times, before the maxi-devaluation seen late in January 2014.

“February 2014 still saw its sales lifted by one of the best Januaries in the history of the sector, we will have a better indication of where the industry stands today when March figures are released,” Bomrad said.

The drop in the auto industry began after a combination of higher taxes on cars and a devaluation of the peso hit the purchasing power of potential car-buyers, combined with lower demand from Brazil and government restrictions on imported spare parts.

Since the drop in car sales started, a contingency plan was launched to protect the industry: Procreauto, a subsidized car-credit scheme to stimulate purchases in a depressed market. After clashes between the government and car-dealers over the final price of cars, however, the plan was cancelled last month.

Although there has been no news yet of a plan that could replace Procreauto, last week the Industry Ministry did announce that fewer restrictions would be placed on imported spare parts, increasing the permit quota from 100 million dollars per month to 154 million. In return, the sector agreed to suspend dismissals and work with the government on the final price of cars.

Last month, ACARA’s Vice-president Dante Alvarez said that forecasting the future of the sector was impossible until it became clear what kind of policies governments in the future would pursue. “We don’t know if there will be cars to sell or if plans to finance sales will be launched,” he said.