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Argentine light-vehicle registrations decline 54% y/y in March
08 April 2019Stephanie 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.
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