Argentina. The auto parts sector experienced an increase in activity, while vehicle production registered a decrease in the first two months of the year.
The Association of Argentine Component Factories (AFAC), in its activity report on the auto parts sector, states that during the first two months of 2024 there was an increase in the level of market activity of 2.5% compared to the same period in 2023.
Likewise, the report states that all items linked to the automotive value chain showed increases during the first two months of the year, except for the sale of fuel, since the vehicles that are in circulation in the country are also decreasing.
Despite the economic uncertainty in the country, the supply of inputs is trending towards normality, as the automotive chain is highly dependent on exports. However, vehicle production decreased by 18.2% during the first two months of the year, representing a total of 60,134 units manufactured in the country.
This decrease is significant, since, for the same two months of 2023, 188,973 units were manufactured.
While exports of auto parts registered an increase of 12.0% compared to February 2023, a general increase is still evident when compared to January of the same year, driven mainly by the large auto parts industries.
The country's new tariff regulations
However, on April 26 of this year, the Argentine government, through the Ministry of Economy, announced the country's new tariff regulations.
This is expected to lead to a significant drop in industry costs. This was explained by the Minister of Economy of Argentina, Luis Caputo: "We will launch a reduction in tariffs and taxes that will benefit this sector that currently has 10% of total industrial production and generates more than 75 thousand jobs (...) Tariffs on metal molds used by the automotive industry will go from 35% to 12.6%, while plastic injection molds will go from 24% to 12.6%."
Different industry players have spoken out against this decision, supporting the statement and pointing out the changes that are coming for the industry.
"The exemption from export duties improves competitiveness in foreign markets, allowing for the gain of productive scale and a virtuous circle on investment and employment," the AFAC said in its press release, adding that "it was incongruous to make efforts to locate auto parts with an average import tariff of 5.5%, while most of these tools had a tariff of 14/24/35%."
