The automobile industry in Argentina has been reeling in recent years and this has been attributed to the slump in domestic economies along with a regional slowdown. Brazil, Argentina’s major trading partner, is also being blamed for this crisis.
According to automobile makers in Argentina, the reforms that have been promised by the president-elect, Mauricio Macri, would certainly take some time to actually have impact on the third biggest economy in Latin America. The automobile sector is thus expected to remain in a slump throughout 2016’s first half. Under President Cristina Fernandez, the challenges imposed by the sector were excessive currency inflation, huge added taxes and duties on luxury vehicles and other trade controls that toughened imports of crucial manufacturing parts.
Macri, who is the victor of the elections on Sunday, has promised to revive the domestic economy by overturning the system of protectionist controls imposed by the former President in addition to reducing taxes and contributing towards freeing up the peso. These reforms would greatly benefit the automobile industry for the long haul according to industry executives but would certainly lead to teething problems in the short term. Devaluation would hit the country’s purchasing power. According to auto experts, Brazil should also not be witnessing recovery before the second half of 2016.
The first six months will be centered on mutual acceptance according to the General Motors President in Uruguay, Argentina and Paraguay, Isela Constantini. According to the President of Renault Argentina, Thierry Koskas, the company is worried about short term impact but is still looking at the long term benefits.
Production of automobiles in Argentina went down by a staggering 25.6% for the year in October alone and exports also went down by a whopping 48.7% owing to the Brazil recession. According to Ford Argentina President, Enrique Alemany, the main question now pertained to whether the Brazil crisis will endure over the next year or whether there are possibilities of some recovery in the second half of 2016. He also added that Ford’s production volumes were not expected to grow much in 2016.