The mechanic notices that the rear brakes on one of his customers’ cars are worn. He seeks to replace them with one of the same brand and they answer that “they are no longer imported”. They offer him various options, until he opts for some Brazilians, the only ones with a “reasonable” price. To the surprise of the owner of the vehicle, his response is forceful: “I have problems with parts of all models and brands.”
It is the tip of the iceberg, what every consumer suffers when they have to look for a spare part or when the delivery of a vehicle with zero kilometers is delayed, sometimes with a date that is impossible to specify. It is that the shortage of dollars that affects the entire economy despite the record income from exports of the agro-industrial complex is not enough to feed the wheel of a sector that still suffers from a chronic commercial imbalance.
economist and consultant Marcelo Elizondoa specialist in foreign trade, is not surprised by these difficulties, but goes a step further: “the sector has problems, basically because many companies are stuck with the normal supply of inputs or finished parts,” he explains.
The special makeup of the sector helps to understand how a difficulty in a minimum percentage of links in the entire chain affects the general operation. Terminals (subsidiaries of large multinational companies that were also merging globally) and auto parts companies (international companies that coexist with national SMEs) coexist in it, all interacting with each other. “The terminals have some advantage because they have the capacity to be heard and the resources to finance their imports with their own dollars, while the local auto parts companies suffer from delays, but the supply difficulties of a few supplies mean that units remain unfinished.”, adds Elizondo.
In short, the problem is not only the stocks or the most subtle obstacles to importation, but directly obtaining the necessary dollars to avoid postponing payments (and for the foreign supplier to accept them) or slowing down the entire process.
imports. The shortage of auto parts is a problem of scale. There is a fact that does not go unnoticed by the automakers: the 80% of the units sold in the local market contain imported parts. As much as those responsible for the main terminals do not express their concern in public and protect themselves in the off the record, they face the challenge of producing, many times, without inputs.
However, according to a report by the consultancy Keys Competitive Informationthe auto parts trade balance presented a deficit of US$4,061 million dduring the first half of 2022, increasing the balance by 31.9% compared to the same period in 2021. Exports, meanwhile, increased by 8.3%closing the analyzed period at US$715 million.
Imports of auto parts increased by 27.8% so far in 2022. This rise accompanied the trend registered in the production of vehicles, which closed the first semester with 243,698 units manufactured (+25.9%). In 2021, 67% of the sector’s imports were made by automakers and their direct suppliers, and of this total, 60% was destined for the export of vehicles. In the sector they are aware of this scenario. For this reason, the head of the Component Manufacturers Association (AFAC), Raúl Amil, maintains that “we have the great challenge of achieving a Substantial improvement in systemic competitiveness that generates a strong flow of investment towards new technologies and greater local integration of parts”.
The data. According to the survey, Argentina’s main trading partners in the sector were Brazil, with a trade deficit in the flow with that country of US$1,092 million; the European Union bloc, with a negative balance of US$797 million; Thailand, whose deficit amounted to US$636 million; China, with a deficit balance of US$537 million, and the United States, accumulating a deficit of US$239 million. The items traded were “Transmissions” (deficit of US$849 million) and “Engine components” (deficit of US$677 million).
Exports of auto parts were concentrated in Brazil with US$452 million (63.2% of external sales of components), registering an increase of 3.9% compared to January-June 2021. The United States was the second export destination accumulating US$53 million (7.4% of the total) and Uruguay was in third place with US$25 million (3.5% of the total exported). For its part, when considering the European Union, sales of auto parts made to said bloc amounted to US$68 million, 9.5% of the total exported. Within it, the three most important destinations were Sweden, Germany and Poland, and together they accumulate more than 62.6% of the exports made to the Union so far this year.
“If the origins of foreign purchases of auto parts are analyzed, as expected, the ranking was led by Brazil. So far in 2022, US$1,544 million were imported from the neighboring country, which meant 32.3% of the total. This implied an increase of 44.5% compared to the previous year.”, highlights Nelson Perez AlonsoDirector of Keys.
The consultant recalls that the authorities of the Ministry of Economy (the Minister of Economy, Sergio Massa, the Secretary of Industry and Productive Development, José́ Ignacio de Mendiguren, and the Secretary of Commerce, Matías Tombolini), agreed at the end of August with the chain automotive boost the sector’s exports and improve its trade balance. “The agreement includes the implementation of the mechanism by which automotive companies that increase their exports will pay 0% export duties for incremental sales abroad”, adds Pérez Alonso. Neither more nor less than an X-ray of the obstacles to be overcome by a sector that, like few others, the bottlenecks of the smallest affect the normal development of the largest.
by Marcelo Alfano
