Argentine light-vehicle registrations decline 54% y/y in March

08 April 2019 Stephanie Brinley, MBA

[Excerpt]

Argentina's light-vehicle market continues to be affected by the country's economic turbulence, with registrations declining 54.3% year on year (y/y) in March, according to latest data from the Automotive Dealers' Association of the Republic of Argentina (Asociacion de Concesionarios de Automotores de la Republica Argentina: ACARA). In the year to date (YTD; first quarter), light-vehicle sales have declined 49.3% y/y. The Argentine light-vehicle market closed 2018 with a 10.4% decline, and the results in the first quarter of 2019 have been as expected. The results reflect changes in vehicle prices, after Argentine President Mauricio Macri's decision to raise the monetary policy rate (the central bank's interest rate) to 40% on a temporary basis in May 2018. The Argentine president also announced austerity measures in September 2018 meant to get the country's budget back on track; the measures do not particularly impact the automotive industry but affect the overall economy. In October 2018, Argentina announced a new monetary policy scheme meant to limit intervention and cool inflation. In early 2019, Argentina is in recession, and the short-term outlook is bleak.

Our optimistic scenario projected Argentine light-vehicle demand topping 800,000 units in 2018, banking on car prices stabilising. A more pessimistic scenario evolved, and a severely devalued peso is likely to take a heavy toll again in 2019 as the availability of US dollars is minimised and consumers run for shelter, sending vehicle sales into a tailspin. The most recent forecast is for the market plunging to less than 600,000 units in 2019. In 2018 and 2019, the market is suffering a serious pullback lasting 18-24 months as the economy and currency stabilise. This is forecast to be followed by release of pent-up demand and growth from 2020 through 2025. Argentina is not forecast see annual light-vehicle sales of over 700,000 units again until 2023.