Argentine light-vehicle registrations decline nearly 57 percent in May 2019

07 June 2019 Stephanie Brinley, MBA

[Excerpt]

Argentina's light-vehicle market continues to be affected by the country's economic turbulence, with registrations declining 56.7% year on year (y/y) in May, 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), light-vehicle sales have declined 51.2% y/y. The Argentine light-vehicle market closed 2018 with a 10.4% decline, and the results in the YTD in 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 on 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 2019, Argentina is in recession and the short-term outlook is bleak. The Argentine government has launched an incentive programme from 6 June through the end of the month. That move followed a higher tax rebate for auto exporters in May. The two measures in combination reflect that the government will continue to evaluate what levers it may or may not be able to pull to improve the situation.

The declines in the Argentine market in 2018 and 2019 have erased gains in 2017, when Argentina's light-vehicle sales returned full-year growth of 27.1% to 859,872 units. The market started 2018 at a frantic pace, although volatility in the pace of growth had been expected even before economic conditions provided a drag. Entering 2019, expectations were for a sharply declining automotive market, so the market performance is not a complete surprise, although conditions continue to deteriorate. Argentine light-vehicle sales are also typically strong in the first part of the year (January alone normally accounts for about 13% of annual sales), so the decline in January and February sent a weak signal that has borne out to be the direction for the year.

Argentine light commercial vehicle (LCV) registrations declined 44.5% y/y in May, and passenger car sales were down 61.0% y/y. Argentina remains a market driven by passenger-car sales, which accounted for 66.2% of light-vehicle registrations in May. However, passenger-car sales' share in May was down from 73.5% in May 2018. In 2018, passenger car sales accounted for 72.8% of light-vehicle registrations, compared with 71.6% in 2017. Sport utility vehicle (SUV) sales in May declined 52.5% y/y, although their market share continues to improve. In May, SUVs saw a market share of 18.7%, compared with 17.1% in May 2018. In the YTD, light-vehicle sales have declined 51.2% y/y.