Argentina Autos Report Q2 2008

Argentina's automotive industry registered record results in 2007, fulfilling the most optimistic of forecasts. Carmakers continue to be drawn to the country because of the market's potential for growth as Argentina, along with other Latin American countries such as Brazil, become the focal point for manufacturers seeking to offset losses accrued in their traditional markets. Positive results were posted at the start of 2008 and the plans being outlined by key players should ensure the industry enjoys another strong year.

According to data from the Argentine carmakers' association Adefa, vehicle output totalled 544,647 units in 2007, up by a solid 26% on the previous year and the highest level since 1959. December was a particularly strong month, with output rising by 27.6% year-on-year (y-o-y) to 50,675 units. The figure is the highest ever reported for the final month of the year and is a good indication of the industry's strength, given that activity tends to ease in December. Indeed, production in December 2007 was actually down by 14.7% on the previous month.

Peugeot Citron emerged as the biggest vehicle maker last year. The manufacturer produced 117,150 units, up by 22.6% y-o-y. General Motors (GM) ranked as the second-biggest manufacturer, posting a massive 62.7% y-o-y increase to 115,301 units. Ford completed the top three with a relatively modest upturn of 11.7% y-o-y to 87,982 units.

Domestic vehicle production was in part fuelled by strong demand last year. Sales soared by 22.7% to 564,926 units in 2007, again the highest level since 1959. BMI is forecasting sales of 597,782 units for 2008 and we expect new product launches to drive growth. Chevrolet, for example, is planning to launch its Epica sedan in Argentina midway through the year. The French carmaker Citron is preparing to extend its product portfolio with the introduction of the new C5 and C4 Picasso, among other models.

Carmakers' plans to tap growth in the Argentine vehicle market are in line with the country's standing on BMI's new Business Environment Ratings Index, where Argentina scores well because of output growth potential. Fiat has resumed vehicle production at its plant in Crdoba and is examining which would be the most competitive model to add to the plant's assembly line. Honda has commenced construction of a manufacturing plant in the country on the back of a US$100mn investment. The carmaker has hailed Latin America as a key region in its production network and a manufacturing plant in Argentina will help the company make further gains.