Boston, MA -- (SBWIRE) -- 05/14/2012 -- The deteriorating regulatory environment in Argentina and the tightening of import restrictions by Brazil have prompted BMI to revise down its 2012 production growth forecast to a cautious 7.1% year-on-year (y-o-y), compared with 8.5% expected earlier.
Estimates from Argentina's autos association Adefa show that Argentina is already beginning to feel the impact of Brazil's imposition of non-automatic licensing on vehicle imports. Argentine vehicle production and exports dipped 21% y-o-y and 11% y-o-y respectively in December 2011, compared with the same month of 2010. In 2011 as a whole, vehicle production increased 14.5% y-o-y to 829,101 units as exports increased an equally impressive 13.0% y-o-y. For the longer term, we keep to our average production growth forecast of 7.4% y-o-y between 2013 and 2016.
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Meanwhile, the regulatory environment is also beginning to affect domestic vehicle sales in the country. In January 2012, the Argentine government enforced new restrictions on consumer goods imports, a move which is likely to create significant shortages of vehicles in the market. The government's latest regulations call for companies to file online affidavits and wait for government approval for their imports from February 2012.
New vehicle sales in Argentina in 2011 grew a robust 22.6% y-o-y to 856,082 units, bolstered mainly by the health of domestic demand amid expansionary monetary and fiscal policies and double-digit inflation. BMI, however, is sticking to its long-held view that these growth rates are unsustainable in 2012. We believe that increases in vehicle prices, restrictions on vehicle imports and soaring inflation will eventually cool some of the demand, limiting 2012 new vehicle sales growth to 7.3% y-o-y at 918,908 units.
Thanks to such restrictive practices, Argentina - alongside Venezuela - was the biggest loser in BMI's risk/reward ratings for the autos industry in the Americas, with its score down 3.5 points this quarter.
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