Mathilde Carlier
Research Expert covering transportation and logistics
Automotive industry in Argentina - statistics & facts
In March 2024, Mercedes-Benz announced its project to open a new production plant in Zárate, focusing on truck manufacturing and bus chassis fabrication. This news was in stark contrast with the state of the Argentine automotive industry. While the automotive manufacturing sector’s value added to Argentina’s gross domestic product (GDP) reached quarterly performances which were overall higher in 2023 than in 2022, a skyrocketing inflation rate and growing national debt can create an unfavorable business environment for automotive companies. The country’s reliance on light vehicle exports partly offsets the impact of its economic instability on the sector.
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. As most automotive companies investing in Argentina are international, these issues have the potential to deeply impact the industry. In 2023, Japanese automotive group Toyota Motor Corporation was the leading producer of motor vehicles in the country, followed by Stellantis’ Fiat Chrysler Automobiles.
An industry heavily dependent on international trade
The performance of the Argentine automotive sector in 2023 dependent mostly on the country’s automotive exports and its commercial vehicle sales, which grew by around 22.05 percent year-over-year compared to a growth of around 5.2 percent for passenger car sales. While Argentina still recorded a negative trade balance in 2023, the country has steadily worked on closing the gap between its automotive imports and exports. In 2023, the automotive industry exported some 7.83 billion U.S. dollars, compared to imports worth 8.2 billion U.S. dollars, the lowest since the onset of the COVID-19 pandemic. Brazil remained Argentina’s main trading partner, with 63.7 percent of Argentine exports going to its Latin American neighbor.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. As most automotive companies investing in Argentina are international, these issues have the potential to deeply impact the industry. In 2023, Japanese automotive group Toyota Motor Corporation was the leading producer of motor vehicles in the country, followed by Stellantis’ Fiat Chrysler Automobiles.
National challenges impact automotive demand
With the country’s soaring inflation, Argentinian consumer confidence has slowly dwindled, despite 2023 recording the lowest unemployment rate in the previous decade. Around 48 percent of respondents from Argentina in a January to March 2024 survey reported having no intention to purchase a car in the next 12 months, while a quarter were planning to purchase a new car for their next vehicle. However, while the automotive market faced decreased demand and slow growth, electric and hybrid vehicle sales soared in the past years, up by 22.3 percent year-over-year in 2023. 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. Argentina’s economic instability, including its high inflation rate and the growing U.S. dollars to Argentine pesos exchange rate, are creating a challenging environment for the country’s automotive sector. As the Argentine automotive industry relies on international trade and investments from foreign automakers, the country’s financial downturn could further impact the sector’s growth.
