Cars: Sales are down 35% and there are no small models on offer

A Toyota Yaris XS the manual gearbox is in circulation, today one of the least expensive zero kilometer cars on the Argentine market $16,000 or $17,000, depending on whether its price is measured in pesos against the official importing dollar ($985) or against the blue dollar ($1,085). In Chile, with far fewer taxes than in Argentina, the same entry-level version is priced but with an automatic transmission $12,900. And in Brazil, which is the country where the Yaris is produced, they offer it patented and delivered to the buyer’s home, but at $19,000.

With the Peugeot 208 manufactured in El Palomar, the opposite situation occurs: you get it cheaper in Brazil than at a local dealershipwhere the New Like version of the 208 costs $19,100 (import price) or US$17,400 (Blue dollar). In Brazil it is $15,000.

In Chile the list price of this model starts from $16,900but the comparison is not free from pitfalls, given that in Chile there are notable discounts (dealerships offer the 208 with a $3,000 bonusalmost 20%) and 48 installment plans, tools that in Argentina they are conspicuous by their absence from mid-2020.

At the same time, in Brazil the products are not the same, since seven out of ten zero kilometers sold in the neighboring country are equipped with an engine. “flex”powered by both fossil fuel and alconaphtha.

The main difference, more than the prices, they became the buyers. In Chile, sales fell very sharply last year, by 26.3%, according to data from that country’s National Automobile Association (ANAC). But for this year sales expectations are stable and also of a possible recovery, according to preliminary estimates from Toyota Argentina, the main exporter of vehicles in the trans-Andean country. The Chilean market, without its own automotive industry and with models entering from all over the world with 6% duties, has gone from selling 400,000 vehicles a year to 314,000 in 2023.

Brazil, for its part, It is no longer a serial manufacturer of small cars. as during Lula Da Silva’s first two terms (2003-2011), when sales reached three million units.

But the neighboring country, Argentina’s strategic partner with twelve automotive companies with factories on both sides of the border, closed 2023 with the best zero kilometer sales record since the pandemic, with 2,176,000 patented units.

With dollar prices similar to those of Argentina, albeit with a lighter tax burden, increasing demand for locally produced cars in Brazil It remains unchanged.

In Argentina, however, cars they were out of reach of the middle class. According to data from the Automotive Dealers Association (ACARA), 33% fewer units were patented in January compared to the same month the previous year.

That January drop could still be explained by a lack of supply: Only on the 25th of the same month did the Government publish Decree 84 which raised the minimum threshold of internal taxes which penalize the price with a further 25% (20% nominal).

But after the “normalization” of internal or “luxury” taxes, that is a tax It is not charged in Chile, Brazil or any other country (see infographic), in turn induced car manufacturers, who had already increased prices by 40% between the end of November and the beginning of December, to apply another similar increase at the end of January.

In this way, the zero kilometers aligned, in pesos, with the new price of the official dollar, which in December had grown from one day to the next by 118.3% (or, in the opposite sense, represented a devaluation of 55 % of weight).

Those who are completely misaligned are the customers: after the 33% drop in January, February sales see another drop of at least 35%, according to preliminary estimates from dealers consulted by Clarín. And this time it’s not for lack of supply, as immediate delivery is offered for most models today.

“There is a phenomenal arrest. We are experiencing very high inflation and a falling dollar, a disastrous combination”, summarized the director of a Fiat and Citroën dealer group. Of these brands, the models that continue to be sold are two imported from Brazil, the Fiat Strada and Fiat Toro pickups. On the other hand, national models such as the Fiat Crono and Peugeot 208 no longer “fly” as they did when they represented a port of value. “Also, the terminals don’t help with pricing,” the retailer added.

Even with this relative paralysis, there are still cases where they occur waiting lists of several months for some models. In this area, Toyota stands out with the Yaris and Corolla Cross models, imported from Brazil at zero duty and which continue to be in great demand.

“Brazilian cars are still positioned with very attractive prices, and for these we continue to have an unsatisfied demand that will gradually be satisfied,” one of the brand’s main dealers told Clarín.

In 2023, Argentina produced 615,000 vehicles (of which 55% were exported) and nearly 450,000 vehicles were patented in the domestic market. According to ACARA, estimates for this year speak of a decline of at least 20%, but the body led by Sebastián Beato has warned that it expects to revise this projection “downwards”.

Will this decline be temporary or is it destined to last? For Andrés Civettaeconomist at the consultancy Abeceb.com, we must prepare for a zero-kilometre market that will be out of reach for large swaths of the middle class, because in addition to the honesty of prices in dollars, there is a quantity of taxes against which no commercial advertiser can compete.

“We are not going back to a big market in Argentina, like 700,000 or 800,000 vehicles a year. And that It has to do with the exclusion of many people, consumers who previously accessed the vehicle there. A segment of the upper-middle class will continue to access it, but we still need to incorporate more people, to reach the numbers we once had. AND This is why economic growth is necessary.”.

Another significant fact is that, even with a possible liberalization of restrictions on imported vehicles, there will no longer be as cheap cars coming from Brazil as before. Volkswagen Gol and Up, Renault Kwid, Ford Ka or even Toyota Etioswhose production has just been discontinued.

And, what’s more, it aggravated the crisis they cut taxes.

“We share the VAT rate with other countries, but in Argentina the selling price of a zero kilometer is also affected gross income, taxes on bank debts and credits, stamp duty, municipal taxes and PAIS tax. It is also the case in vehicles the luxury tax”Listed Owl. “AS, We cannot say that the Argentine industry is not competitive. “They are taxes, which do not exist in other parts of the world”.