Argentina is the second-largest economy in South America and it is also the continent’s second-largest fleet market.
The total automotive market in Argentina, both retail and fleet, is the second-largest in South America.
In 2017, the total new-vehicle sales market in Argentina was 902,402 units, with the fleet market comprising 8% of that total volume. In 2017, the fleet market for all brands was a little over 114,000 units, of which 29,000 were heavy trucks.
A key fleet market in Argentina is with large multinational corporations, such as pharmaceutical companies.
“Typically, corporations purchase their fleet vehicles rather than lease them, but leasing is growing in popularity as a vehicle funding method,” said Marcelo Tezoto, Senior Manager – Fleet Sales for General Motors.
The vocational fleet market is also strong in Argentina. The strongest vocational fleet segments are companies in the food distribution, petroleum, mining, utilities, passenger transport, and car rental.
“The car-rental industry is one of the principal fleet markets in Argentina, which is growing because of increased tourism and business travel,” said Tezoto. “Another large-volume fleet buying segment is the construction industry, which is growing because of the government’s infrastructure development policies. Another important fleet segment is comprised of agribusiness companies. But most fleet customers are the many small businesses, with each company buying small volumes of fleet vehicles.”
Incentives or discounts in the fleet channel are very aggressive, ranging from 13% to 25% in sales to fleet companies and government tendered discounts can reach 30%.
In Argentina, OEM new-vehicle dealers work together with the auto manufacturer they represent in selling to multinational companies, along with small- and medium-sized companies.
“The Argentinian new-vehicle market has continued to grow in 2018 following a strong 2017 calendar-year,” said Tezoto. Sales shot up 19.6% year-on-year in February 2018 to 69,828 registrations for all classes of vehicles, which was a new all-time record for the month. This strong sales volume lifted the year-to-date tally up 24.8% to a record 190,636 units for the two-month period of January-February 2018. The top selling brand in Argentina is Volkswagen with a 16.2% market share. The top five brands in Argentina, in order of market share, are VW, Chevrolet, Renault, Ford, and Fiat. Making dramatic sales gains are Korean and Chinese OEMs. Among the Chinese OEMs selling in Argentina are Chery, Lifan, Geely, and Dongfeng. Chinese OEM sales, as a whole, were up 118%, which represents a 1.4% market share.
VW is looking to increase domestic production in Argentina. Volkswagen is investing EUR560 million over the next five years to build a new SUV model for the South American market from 2020 at its Pacheco, Argentina, plant. From 2020, the plant will deliver the new model built in Argentina to the entire South American continent.
In calendar-year 2017, Argentina exported 209,587 vehicles, which was a 10.3% increase from the 190,008 units exported between January and December of 2016. Argentina and Brazil have a long-standing accord over auto sales but have frequent disputes over the tariffs and quotas involved. The two countries are also part of Mercosur, a regional trade bloc with Uruguay and Paraguay.
Other export markets for Argentine-produced vehicles are Central America, Mexico, Chile, and Peru, as well as the Australia and New Zealand region.
In March 2017, however, the Asociación de Fábricas de Automotores (ADEFA), an association of 11 auto plants in Argentina, struck a deal with the government and auto unions that is intended to increase car production to 1 million units by 2023, creating 30,000 new jobs in the process. Its key provisions are to increase the share of local components to 40% of the total, to diversify auto exports, particularly to the EU, and (from the union side) to reduce worker absenteeism.
Argentina’s government is also looking to strike a trade agreement with Colombia, one of the region’s strongest economies, as part of its effort to raise exports. Meanwhile, Brazil’s new auto policy, Rota 2030, in January 2018 replaced the prior regime, Inovar Autos. Rota 2030 is designed to create a more open approach to trade deals, which is expected to be more beneficial to Argentine vehicle exports.
Fuel Price Trends
Argentina continues to have one of the most expensive fuel prices in the South American region. In the regional ranking, Argentina is the second-most expensive country in South America. From Dec. 25, 2017 to April 2, 2018, the average price per liter for gasoline in Argentina was 25.06 Argentine Peso ($1.24 USD).
Depreciation & Maintenance
The average vehicle depreciation in Argentina is 15% in the first year and 10% per year after that. Traditionally, the resale market absorbs used vehicles of fleet customers.
The sales activity in the wholesale used-vehicle market in Argentina, like the new-vehicle market, has experienced a strong recovery in calendar-years 2017-2018, with resale prices on the upswing. The used-vehicle market in Argentina, and South America as a whole, is expected to undergo significant changes over the next five to seven years. The adoption of online remarketing technologies and business models are likely to completely transform the way used cars are bought and sold.
In terms of fleet maintenance trends, parts availability remains a problem in Argentina, but it is getting better. However, the price of spare parts continues to be high.
“Companies, nowadays, are interested in becoming more efficient in their fleet administration process,” said Tezoto. “They are focusing on reducing cost and increasing vehicle productivity by maximizing the hours they are in operation, which is why outsourcing this process is becoming more popular. These companies want to outsource maintenance management to those companies that specialize in fleet administration.”