In 2020, Argentina was the third largest motor vehicle manufacturer in Latin America, surpassed only by Mexico and Brazil. The country was also the second market in the South American region for new vehicle sales, outpaced only by Brazil. Yet despite its position as one of the leading national automotive industries in the region, the Argentinian motor vehicle sector has seen better days: The COVID-19 pandemic put production at a standstill as demand for new vehicles dropped, and, though the market rebounded in 2021, manufacturers and auto dealers also had to contend with the global chip shortage depleting vehicle inventories across countries and brands.
Economic instability affecting vehicle sales and production
The COVID-19 pandemic impacted consuming markets worldwide: In Argentina, light vehicle sales plunged by over 26 percent in 2020, as compared to the same period the previous year. Nevertheless, this was only the extension of a trend already observed over half a decade. Amidst rising inflation and unemployment rates, Argentinian consumer confidence has slowly dwindled. In 2020, vehicle registrations in the country amounted to 333,900, a year-on-year drop of roughly 18 percent. In contrast, electric and hybrid vehicle sales have soared during the pandemic, doubling 2020 sales in 2021. In 2020 and 2021, two bills were introduced in the country which included the proposal for incentives to promote national electric vehicle (EV) manufacturing and soft credits to produce or buy EVs.
With demand from both the domestic and international markets at a low throughout the pandemic, automotive production in Argentina has inevitably suffered. In 2020, approximately 260,000 motor vehicles were produced in the South American country, down from over 800,000 a decade earlier. Passenger car production was the primary contributor to this reduction, with its output shrinking by more than 80 percent in the period. Meanwhile, Argentina has tried to establish itself as an SUV and pick-up truck manufacturing hub, with the production of light commercial vehicles surpassing that of passenger cars in 2017. This production, however, decreased annually ever since, until 2021, which marked the beginning of a recovery for the manufacturers, with output rebounding well over its 2019 pre-pandemic levels.
Textbook case of the law of supply and demand
Similarly, motor vehicle exports from Argentina have also struggled, reporting an overall continual decrease since the beginning of the decade. This is primarily associated with a decline in demand from its leading foreign trade partner, Brazil, which also has been trying to recover from an economic crisis that hit in 2014. Recovery in 2021 has however been encouraging for Argentina, as its exports surpassed even pre-pandemic levels recorded in 2019. The country still recorded a negative trade balance in the sector, with imports from the automotive industry surpassing their exports. Due to this dependency on imports, Argentina faces challenges linked with the automotive semiconductor shortage.
On a manufacturer level, this can be observed with the challenges faced by Toyota—the leading vehicle brand in Argentina—as it had to halt production at some of its manufacturing plants due to the scarcity of auto parts and to the trucker blockades in Canada.
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In the following 5 chapters, you will quickly find the 27 most important statistics relating to "Automotive industry in Argentina".