As a result of the global credit crisis, Argentina’s industry is undergoing a major downturn .  Falling confidence and a lack of access to credit among consumers is likely to keep vehicle sales at as low as 500,000 units .According to figures released by the Argentine group Asociación de Fabricas de Automotores (ADEFA), domestic vehicle demand ( venta de autos usados en argentina) contracted by nearly 35% year-on-year (y-o-y) to 66,794 units in the first two months of this year , indicating that the market is heading towards a sharp slowdown. BMI’s revised economic outlook forecasts a 0.1% fall in Argentina’s real GDP growth in 2009, which we expect to be followed by another 0.9% y-o-y drop in 2010. Our forecasts highlight the vulnerability of the Argentine economy to external disturbances and indicate that recovery is likely to be slower than in other Latin American markets. We expect low consumer confidence to pull new vehicle registrations down by nearly 3.5% y-o-y in 2010, after which we foresee robust 4% y-o-y growth in 2011.BMI expects most carmakers to work on reduced capacity this year due to falls in domestic and export demand. Argentine carmakers produced 55.1% fewer vehicles (33,623) in January-February than the same months last year. This has prompted BMI to forecast nearly 27-30% lower production volumes – 438,500 units – by year-end. Having reached a level as low as 431,746 in 2010, we believe that Argentina will climb back to 2008 production levels no sooner than 2013. Probably new car sale ( venta autos nuevos en argentina) will be highly impacted.

Argentina occupies second place, after Brazil, in BMI’s Business Environment Ratings for the industry, with a score of 59.7 points (out of a possible 100). Despite our view of a severe short-term economic risk, the country receives a relatively high score for its competitive landscape due to the high number of industry players seeking to achieve sales growth there. Chinese carmaker Chery Automobile has announced plans to set up a new assembly plant in the Chaco Province, northern Argentina. BMI is hopeful that with a maximum projected production capacity of 100,000 units by 2012, compra venta de autos will sonn recover.  Chery could make its way as one of the leading carmakers in the region.PSA Peugeot Citroën and General Motors (GM) currently dominate, producing 131,791 and 111,911 vehicles in 2008, respectively. On the sales front, GM and Germany’s Volkswagen (VW) hold the leading positions with 96,634 and 125,370 respective units sold last year.