The president of Ford Argentina and head of the association that brings together automotive companies based in the country (ADEFA), Martin Galdeanoestimated, in dialogue with Ambit, that this agreement could be positive for the sector.
“The possibility of implementing financing mechanisms that facilitate trade with Brazil is excellent news due to its positive impact both on the supply of parts for production and on the supply of vehicles in the local market,” he said.
He also recalled that the supply of units is also limited by global semiconductor shortage problems.
Other automakers agreed that, in principle, the bilateral financing agreement could help improve the supply of cars in Argentina.
For three years, the local market has been conditioned by the lack of 0 km imported due to the lack of dollars.
While vehicles arriving from abroad represented more than 70% of registrations in 2019, currently they only reach 45% of sales.
This caused, in many cases, delays of more than six months for the delivery of certain models and the application of surcharges became general.
Consumers
This possible agreement would be good news for Argentine consumers since they would have greater availability of vehicles to buy.
Given the lack of imported vehicles, demand was concentrated in nationally produced vehicles that saw sales grow.
The problems in obtaining import permits – known as SIRA – set the pace for 2022. In this way, automakers operated with the uncertainty of not knowing when vehicles would be able to enter the country.
For example, so far in January, the government has not authorized the import to any terminal. It is estimated that in the next few days it could release the SIRAs that are on hold, but this marks the level of unpredictability with which they work.
In addition to decompressing the demand for dollars to import 0 km, the measure could alleviate the problem that exists with auto parts. If there are fewer foreign exchange requirements to import 0 km, those dollars that are left over could be used to import inputs for production.
However, from this sector they appeal to prudence regarding the impact of the measure since, for the moment, it was only an announcement. The doubts that exist range from the way in which the agreement will be operational to the currency in which the Argentine company will borrow and what the rate will be. “These are basic questions that are still not clear,” they explained from a company.
The delicate auto parts issue since for a long period they have been operating without clear rules of the game. With the tightening of the import stocks, the term for the Central Bank to release the dollars to pay foreign suppliers was extended. From the 30 or 60 days with which it normally operated, it went to 180 days. This caused many companies outside the country to demand advance payment, which implied that they stopped shipping merchandise and will complicate the production of vehicles because the supply chain was cut.
The Government agreed with automobile companies and auto parts manufacturers to reduce this period, but the situation is not normalized. Some companies assure that they are not certain of the term in which they will be able to pay their suppliers since there is no foreseeable policy. “We work blindly all the time because we don’t know when we will be able to pay. This makes it impossible to plan the work,” they told Ambit from an auto part
Panorama
The outlook is challenging since by 2023 all the terminals are projected to increase their production, especially due to higher exports that generate genuine dollars. This will mean a greater need for dollars to import more inputs.
It must be taken into account that due to the problems of the drought, a lower income of foreign exchange is expected from farm exports, which will make the situation of the Central Bank more complicated.
At a press conference, the Minister of Economy, Sergio Massa, together with his Brazilian colleague, Fernando Haddad, explained that the objective of the is to intensify trade between the two countries.
“We are moving forward with a reciprocal export financing program that aims, in the case of Brazil, to increase the volume and simplify the life of Brazilian companies when exporting to Argentina, and in the case of Argentina, to increase the rate of supply in Argentina’s value chains,” Massa explained.
With this credit system, which could be for a package of more than US$10,000 million, Brazilian companies could increase their sales to Argentina. With the current situation, the flow of exports is limited.
As estimated by the Argentine economic team, the mechanism could be defined in 90 days.
Source: Ambito
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