Record deficit for auto parts: increased by 28% and closed at over $8.7 billion

The trade balance of the auto parts sector registered a record deficit of $8,766 million in 2022, the highest in the last 20 years, according to a report by the Association of Argentine Component Factories (Afac). For their part, exports increased by 11.6% and closed last year at 1,522 million dollars.

The sector’s trade deficit grew by 28% compared to 2021. “It should be noted that this imbalance was a record for the period 2002-2022, even compared to 2011, when the historic maximum of vehicle production was reached. “, specifies the report of the Afac. .

“There are very deep causes driving this deficit, with a heavy reliance on imported components, even though more than 60% of locally produced cars are then exported. Argentina has lost product offerings and at the same time the vehicles are starting to require new technologies,” he explained to GlobeLiveMedia Juan CantarellaCEO of AFAC.

Most imported auto parts are destined for car production, although a smaller percentage is also destined for the replacement market – consumers and mechanical workshops that purchase spare parts – and for agricultural machinery. In production, it is estimated today that for a pick-up the local components reach 40% and for cars between 25% and 30%.

“Argentina has lost its product supply. Over the past 10-12 years, 50 auto parts companies have closed. Seat belts, airbags and braking systems are no longer manufactured locally. As far as the conditions are not created for investment in these sectors, this deficit cannot be substantially reduced. A pro-investment shock is needed,” added Cantarella.

“In addition, vehicles are starting to require new technologies that are not made in the country. There is an inconsistency because auto parts import tariffs are low, 5% to 6% on average as many have a zero tariff. But when it comes to deciding whether to manufacture, capital goods have tariffs which are 14%, 25% in addition to 35% It takes a very source investment process, five years with very marked incentives, “said the head of Afac.

From the association, they pointed out that the elimination of export duties for additional exports was a good measure, but they requested that due to the high requirements of competitiveness in international markets, the export tax be deleted in its entirety. Another measure of great impact, as they indicated, is to achieve the systematization of the inventory replenishment regime, in particular to improve the competitiveness of auto parts SMEs.

According to data from the report, imports of auto parts increased by 25.3%, reaching USD 10,288 million in 2022. Among the causes are cost increases in recent years in major inputs that affect the price of imported auto parts .

The bone Argentina’s main trading partners in the sector were Brazil, with a trade deficit of $2,318 million (imports for $3,318 million and exports for $1,001 million), the European Union bloc , with a negative balance of 1,786 million dollars (1,921 million dollars in imports and 135 million USD in exports), Thailand, whose deficit amounted to 1,328 million USD (imports for 1,329 million USD and exports for 375,688 USD), China, with a deficit balance of 1,107 million USD (imports for 1,110 million USD and exports for 2.3 million USD) and the United States, accumulating a deficit of 494 million USD (595 million USD of imports and 101 million USD of exports).

The main items traded were transmissions (deficit of $1,799 million, $2,282 million of imports and $483 million of exports) and engine components (deficit of $1,404 million, $1,689 million in imports and $284 million in exports).

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