An industry heavily dependent on international trade
Both international and national factors have been impacting the Argentine automotive sector, partly due to its interconnectedness with other countries in the Latin American region. Brazil, Colombia, and Chile are the countries where most of Argentina’s motor vehicle exports were sent in 2022, with neighboring Brazil receiving nearly 63 percent of Argentina’s exports. The country’s light vehicle exports increased in 2021 and 2022, up to almost 322,300 units. However, while Argentina’s 2022 export volume exceeded the exports recorded in 2018 and 2019, this growth was insufficient to offset its motor vehicle imports. The country registered a negative trade balance in the sector since at least 2009, with imports from the automotive industry surpassing their exports. Due to this dependency on imports, Argentina faced challenges linked to the automotive semiconductor shortage and rising raw material prices, which disrupted the global automotive supply chain in 2021 and 2022.This dependence on international trade creates various challenges for Argentina. Access to auto parts and raw materials could be a hurdle for the country in the coming years, especially dependent on the evolution of the exchange rate between the Argentine pesos and U.S. dollars. The de-dollarization of the global market has the potential to impact how Argentina faces this challenge. However, the country also relies heavily on international brands and their investment in the sector. In 2022, Toyota was the best-selling vehicle brand in the Argentine market. The brand is a subsidiary of Toyota Motor, which has a manufacturing plant in Buenos Aires and was the leading producer of motor vehicles in the country in 2021.
National challenges impact automotive demand
Motor vehicle sales grew by nearly six percent in Argentina between 2021 and 2022. Various national factors influence market growth: With the country’s soaring inflation, Argentinian consumer confidence has slowly dwindled despite 2022 recording the lowest unemployment rate in the previous decade. Around 53 percent of respondents from Argentina in a January to March 2023 survey reported having no intention to purchase a car in the next 12 months. However, while the automotive market faced decreased demand and slow growth, electric and hybrid vehicle sales soared in the past years, up by 33.7 percent year-over-year in 2022. In June 2023, a law on investments in the automotive sector including provisions for electric mobility spending was approved, which could further boost the new energy vehicle segment.Despite hurdles with the national demand, automotive production in Argentina has been rising. In 2022, approximately 536,900 motor vehicles were produced in the South American country, up from the nearly 434,800 units manufactured a year earlier but down from the 828,800 recorded in 2011. Passenger car production was the primary contributor to this growth, with its output increasing by 39.9 percent between 2021 and 2022. The manufacturing sector’s dependence on international trade and investments contextualizes the success of Argentina’s automotive manufacturing sector. Automotive industry employment in Argentina was also at its second lowest point in the past decade as of 2021.
