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Argentina Autos Report Q2 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Argentina |
Published |
23 February 2010 |
Number of Pages |
55 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
With demand in its domestic market looking far from promising, Argentine carmakers are increasingly turning to overseas markets, particularly Brazil, to help boost their sales. We point out that Brazil had once accounted for as much as 81% of Argentina's vehicle exports, which was gradually reduced to just over 62% by 2007 as the latter diversified exports to strengthen trading relations with its other neighbours. However, now that we are forecasting a substantial 11% year-on-year (y-o-y) increase in sales during 2010 in Brazil, it is no surprise that Argentine firms are returning.
Estimates from the Asociación de Fábricas de Automotores de Argentina (Adefa) show that the exportdependent nature of Argentine production has, to a large extent, helped kick-start the recovery in production, as is evident from the y-o-y increases of November and December 2009. Yet the market has ended 2009 down more than 14% y-o-y, to 512,900 units. In 2010, we forecast production to rise 6% y-o-y rise, to just under 406,000 units, as we remain fairly cautious about the impact of the global economic downturn on the domestic and export markets. In the longer term, we expect the market to benefit from growing income levels in the region and pick up in economic and industrial activity in Brazil, which should take production up to 783,100 units by the end of 2014.
On the other hand, we expect trends in private consumption and employment to be the main drivers for domestic demand in 2010. Despite a host of government incentives, the market ended 2009 with sales down nearly 20.5% y-o-y, to only 487,142 units. With market still showing cautious signs of growth towards the end of 2009, we remain fairly reserved about any robust sales growth and forecasts a modest 4.2% y-o-y in 2010. This will, however, be followed by more promising growth during 2011- 2014, by the end of which we expect the market to have reached sales of more than 707,000 units.
Although, Argentina’s geographical location, its trade links to surrounding markets, and its strong economic activity are all incentives for carmakers to invest, a poor business environment marked by uncertain political landscape and inflation have dragged Argentina down to the fourth place – down from a third – in our ratings for the autos industry in America this quarter.
In this latest report, we have extended its coverage to include the motorcycle segment, where we have briefly discussed how Argentina has emerged as one of the most competitive motorcycle markets in the region, and boasts a strong presence of both foreign as well as domestic motorcycle makers. Similar to the four-wheeler segment, growth opportunities in the motorcycle segment have prompted carmakers to seek increased presence in the country, in a project which is strongly supported by the government through its cash reimbursement schemes and the tax incentives.
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