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Argentina Automotive Market

Industry Sector

Automotive and Parts

Published

13 February 2012

Author

Paul Chapman

Type of News

Market

Argentina has a well developed automotive industry that started in the early 1950's with nine firms producing automobiles and trucks of European design. The automotive import market is pretty much restricted due to an Automotive Industry Cooperation Agreement with Brazil which allows for the integration of bi-national production and severely limits imports of automobiles, trucks and parts from third countries. The restriction is even stricter on used vehicles and parts: there is an outright prohibition. Local production of vehicles exceeded 800,000 during 2011 of which 81 percent were exported to Brazil and other Latin American countries.

The nine local manufacturers and their respective market shares, in ranking order, are:

  • General Motors Argentina - 18%
  • Peugeot-Citroen - 18%
  • Ford Argentina - 13%
  • FIAT - 13%
  • Renault Argentina - 12%
  • Volkswagen Argentina - 11%
  • Toyota Argentina - 10%
  • Mercedes-Benz Argentina - 2%
  • Iveco - 1%

DEFA, the local automobile manufacturers' Association, estimated the total the total number of vehicles at 7.1 million for 2010, of which 4.8 million were cars and station wagons and 1.7 million were light commercial vehicles and minibuses. At least 50 percent are over eight years old and one third run on compressed natural gas (CNG), which is significantly less costly than gasoline. New vehicle sales have been growing steadily since 2003, and from 2010 to 2011, growth reached 39 percent.

It is important to note that automobiles in Argentina are significantly more expensive than in the other countries. If one compares the number of salaries that a blue collar worker needs to purchase a similar car, the ratio is even more dramatic: an Argentine worker needs 15 monthly salaries to afford a small car, while in the U.S. it is five. There are other factors to consider in order to understand the peculiarities of the Argentine market for automotive: it's a country of 40 million inhabitants where:

1) leasing is not available;
2) Argentina has one of the highest traffic accident rates in the world
3) there is significant car theft.

This translates into very high insurance costs, which average ten percent of the value of the vehicle, annually. For the vast majority of the population, owning a car is a costly investment and one that entails a significant portion of disposable income. This greatly limits the possibilities of many segments of the population to indulge in accessories or performance equipment.

It is important to bear in mind that Brazilian imports enter Argentina free of duties because of the MERCOSUR customs agreement. This competitive advantage places Brazil as Argentina's second largest supplier.

Regarding the market for parts in general, the average vehicle lifespan in Argentina ranges from 10 to 15 years. Low-end buyers strongly favor third party rather than OEM products. Therefore Asian suppliers dominate the market for replacement parts. Aftermarket parts imports consist, primarily, of low cost Asian imports. High quality hoses, belts, filters, batteries, light bulbs, brake pads, a/c compressors, air bag systems and other electronic are sourced from the U.S. and Europe.

Overwhelmingly, Argentines prefer manual transmissions, which account for more than 85 percent of cars sold. As for engine size, 85 percent of cars in Argentina have a cylinder capacity between 1.2 and 2 liters. But this is changing gradually. Although small cars remain the most popular type of car in Argentina representing 70 percent of all new registrations in 2011, the appeal of larger-sized mini-vans is also increasing. Of the 4.8 million cars on the road today, 85% are of European design, Japan 5% and Korea 4%.

See other Argentina Automotive market research.

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