"Argentina Autos Report Q3 2014" Published

From: Fast Market Research, Inc.
Published: Mon May 26 2014

Vehicle sales in Argentina declined 25.5% y-o-y in the first three months of 2014, to 151,306 units. BMI has become increasingly bearish on the outlook for the Argentine autos sector in 2014 on the back of a devaluation of the peso in January, and the likelihood of further weakness in the unit going forward, and new taxes on autos imports. High inflation, slowing real wage growth, and increasing unemployment levels are likely to keep private consumption subdued in 2014, weighing on consumers' appetite for big ticket purchases. Moreover, high base effects from strong sales growth in 2013 will temper the y-o-y growth rate. We expect these dynamics to continue over the coming months, and believe this will weigh on the autos sector. Accordingly, we forecast a bearish 20.0% decline over the year.

Full Report Details at
- http://www.fastmr.com/prod/811695_argentina_autos_report_q3_2014.aspx?afid=302

We caution that, if inflation continues to escalate, Argentine consumers may start to purchase vehicles as a store against inflation, as we have seen in Venezuela. This would serve to drive sales, but would lead to a huge increase in used car prices and further exacerbate inflation problems.

Vehicle production in Argentina contracted 16.2% y-o-y in the first three months of 2014, to 147,416 units, on the back of sustained declines in the domestic and export markets. BMI expects these dynamics to continue, and believes that this will weigh on output volumes over the year. Accordingly, we forecast vehicle production to decline 12.0% in 2014.

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