Three months ago, when Toyota Argentina launched the national assembly plant for the line in Zárate hiacethe concern that the entire Argentine automotive industry had was supported by two major pillars, the drop in sales due to the macroeconomic situation and the high tax burden which applies to manufacturers both to produce and market automobiles in Argentina.
On that occasion, however, the president of the national Toyota subsidiary, Gustavo Salinasplaced special emphasis on the need to recover the competitive capacity of the products manufactured in Argentine plants to be able to maintain production relying on exports. “No car factory in Argentina can be sustained only by the domestic market. Toyota exports 80% of its production Hilux and SW4. Our projections, which we know are among the most optimistic, would take us to a domestic market of about 380,000 units by 2024,” he explained then.
Much more than 90 days have passed since then, because The market tanked in March and began to recover in April by dint of many promotional actions by the brands, but in addition, there was a meeting between the manufacturers and the Minister of Economy, Luis Caputoand two weeks later, a battery of announcements that tend to improve the competitive conditions of Argentine products for foreign markets, which fundamentally include the reinstatement of the tax exemption for incremental imports and COUNTRY tax for products that are imported temporarily to produce parts or cars that will be exported.
This Wednesday, within the framework of the presentation of the new generation of the successful Toyota Corolla Cross 2024the successful C-segment SUV of the Japanese brand that is manufactured in Brazil, Salinas made an evaluation of the scenario with these changes.
“These measures that were announced were very welcome because they allow us to give sustainability and volume to the export business. Implementation is still missing, but it is something that will happen. The domestic market has been recovering gradually, as was foreseeable; it was not going to be an abrupt recovery. We hope that this process continues, not in the shape of a “V” as some predicted but progressiveand that this allows us to close a year of transition and balanced organization,” he noted as a balance of the first quarter.
The recovery is real, from being 30% down in sales after the first quarter in the year-on-year comparison, after April, they recovered five percentage points and now the numbers say that between 2023 and 2024, the domestic market shrank by 25%. This was largely thanks to freezing or lowering of some pricesthe appearance of bonuses, discounts and promotions of various kinds depending on the strategy of the terminals, and also the credit comeback with financing plans with a 0% rate for certain amounts, values or models in other cases.
Will car prices continue to drop?, is probably the question that many consumers ask themselves today, when seeing so many promotions. Toyota, for example, has not increased the price of its Hilux pick-up since January 25, but other brands have been more aggressive in seeking customers with price reductions.
“In this case I can only speak for Toyota. Argentina is in a price normalization process of many things, because we came with distorted prices that sometimes make us lose relative vision of things. If one looks at our line of Yaris, Corolla, Corolla Cross and even Hilux, A person who buys a Toyota in Argentina today is not paying more in dollars than any customer in the rest of Latin America except Chile., which has a very special condition because it is an open market without taxes. This is public information. Anyone can enter Brazil and see the prices of those models, and Argentina has the cheapest prices. You enter Colombia, exactly the same. You enter Peru, which is also an open market, without import duties or anything, and we are generally cheaper too. This, in the case of Toyota, is based on the effort to sustain the market. I repeat. We in Argentina “We have the cheapest prices in dollars purchased with any other market in Latin America”explained the president of Toyota Argentina.
Said this way, it seems that the market is at a floor. If Toyota, which has the lowest prices in the Argentine market, points out that fact, prices should not continue to be depressed of zero kilometer cars in the coming months.
“I always say that what moves the market is demand, because no matter how much you make an offer for whatever it is, when there is no market, when there are no people willing to buy and with resources, you are not going to be selling. So I think the potential demand is there and what we have to do is motivate it, attract it. We at Toyota did that, getting as close as possible to that potential demand to be able to maintain our volumes, since we have a very large structure and we need to continue with our projects. What we did was position ourselves in all segments with the most competitive prices on the market, even making a very strong bet with products that we do not manufacture and bring imported ones,” explained the President of the company.
Price lists and sales numbers confirm this. He Toyota Yaris is the most affordable car on the market with an access price of 18.4 million pesos, when the rest of the competition has its cheapest model close to 20 million pesos or above those values. The Toyota Corolla and Corolla Cross, which also come from Brazil, were once again firmly among the ten best-selling models on the market in April.
“Although the market is completely free to import, conditions remain very challenging. We are getting more into debt because We can make payments within 180 dayswe continue to assume a very high import cost because in addition to the internal tax when applicable, there is the COUNTRY tax that has an impact on the final product, and that makes importing a very big risk bet,” said Salinas.
The first imports that were made in December under the new government, which maintained 180 days for manufacturers to have the dollars to pay for operations, although with the certainty of being able to meet that commitment, They can be paid in June. This means that during the first semester, the terminals and importers that brought cars went into debt month after month to maintain their operations. Salinas says that is one of the problems.
“Under this current payment condition, if this were maintained, We are going to end up more indebted at the end of 2024 than at the end of 2023, because although you reached the peak at one point, now in June, it drops a little from then on but you are still more in debt than at the end of last year. That is a problem, but since we have to look at the long term, we decided to take that position to take care of our operation in Argentina. A short-term view would have been to not care too much, to shrink you, to restrict you, which for us is to mortgage the future,” he noted.
Market price distortions from tariffs and taxes, such as luxury car tax, have generated that between April and May, there have been models that dropped up to 40% in price due to having gone down the scale and going from the second to the first after the update of the aliquots that determine the categories. For many major players in the industry, it got to the point that the excise tax demonstrated how harmful can be for consumers, because it determines an excessive price of cars.
“I believe that in the framework in which Argentina’s fiscal restrictions improve, This tax should clearly be a point to review. Surely today it is not possible, because we are still in a very complex organization process, but I have the hope that in the future this can be reviewed and we will once again have in Argentina the possibility of renewing a vehicle fleet not only quantitatively but qualitatively better. , that we need it. Today, after many years of a very depressed market and with little introduction of new modelsone can see it on the street. The vehicle fleet is running out of time, not only in design but in safety, reduction of polluting gases, etc. The normalization of this famous luxury tax should occur as part of the normalization of the automobile fleet,” Salinas explained.
