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Argentina Autos Report Q1 2009
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Argentina |
Published |
12 March 2009 |
Number of Pages |
60 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Declining consumer pessimism brought forward by the ongoing global financial crisis, may bring an end to the period of robust growth in Argentina. As BMI examines its latest Argentina Automotive Report, the crisis is not only likely to reduce Argentina’s attractiveness to investors in the short term but may also affect consumer spending and the market’s full recovery in the long term.
According to figures released by the Argentine automotive association ADEFA, domestic vehicle sales in 2008 totalled 611,770 units or 8.3% higher over 2007 despite posting a growth of 18.2% y-o-y in the first three quarters of 2008. The robust growth until Q308 was mitigated by declining trend in registrations in Q408. With little credit access to consumers and lack of confidence in the local banking system, it is unlikely that the Argentine domestic sales will recover in 2009. In fact, BMI’s economic outlook for Argentina forecasts economic growth of only 0.6% in 2009 and a contraction of 0.9% in 2010, as private consumption and investment fall dramatically from their recent high levels. In line with that view, we expect domestic auto sales to plunge to 603,352 units in 2009 and further down to 602,526 units in 2010 before a rebound can take place in 2011.
Cumulative production in 2008 stood at 597,086 units, up by 9% over 2007 against BMI’s forecast of 12% y-o-y growth, thanks to the 47% y-o-y drop in production in December. BMI believes slump in domestic demand, coupled with slowing export demand from abroad are likely to prevent manufacturers from undertaking any production increase. We restrict our production forecast to 590,456 units in 2009 which is expected to go down further to 581,578 units in 2010.
Argentina has decreased its score from 61.0 points to 59.7 points in BMI’s business environment rating in Q109 mainly due to a significant reduction in the limits of potential returns in the autos industry. A high level of competition in the presence of established industry majors is likely to make entry of newcomers to the market difficult, the evidence of which can be seen from Honda’s recent announcement to delay the start of construction of its new passenger car plant in Argentina from H209 to mid-2010.
Amongst existing manufacturers, German automaker Volkswagen held close to 22% of the market share with sales totalling 117,877 units, up by a massive 15.5% y-o-y in the first eleven months of 2008.
Argentina’s second largest player, General Motors (17% market share) sold 90,433 units, higher by 7.85% y-o-y in the eleven month period. However, Argentina’s largest automaker Peugeot-Citroen PSA sold only sold 73,380 vehicles after the manufacturer’s sales dipped 3.7% y-o-y by the end of November 2008, taking it to the third position in Argentina’s competitive environment. Despite the slowdown, Argentina draws competitive advantage as a member of the Mercosur and an important export base for manufacturers and BMI expects the market to remain a competition ground for more manufacturers in the future.
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