Argentina. In May Sales lost 54% with several local brands in financial troubles

Argentine Motorcycles Market

Argentine Motorcycles Market is collapsing hit by the economic and financial crisis and in the first five months of the 2019 have lost 49% of volume, being the worst market globally. Honda has consolidated the leadership while Zanella dropped in third place, overtaken by Motomel. The italian Benelli is leader among the premium brands.

 

Economic Environment

The still-battered Argentine economy continues to wade through macroeconomic rebalancing, on the one hand, and stubbornly elevated inflation and political risk, on the other. Economic activity shrunk less sharply in January-February, although the size of the contraction was severe nevertheless. Inflation, however, showed little sign of improvement, soaring in Q1 amid persistent FX pass-through pressures. This prompted the government to launch a controversial plan in mid-April to control prices on a basket of over 60 essential products, and the Central Bank to tighten its FX strategy again.

Mounting political uncertainty ahead of October’s elections, skyscraping interest rates and painfully-high inflation are expected to depress investment and also hit consumer spending. However, rising agricultural output and a weaker peso should sustain exports, cushioning the downturn, while the twin deficits will be reduced.

 

2019 Market Trend

Having spent five month of the year, there are no doubts that the 2019 is a really awful year for the Argentinian two-wheeler industry with the domestic sales declining with a huge speed since the January. The fall is not unexpected, considering the over 40% lost already reported in the fourth quarter 2018 and the persistent economic crisis which is cutting demand for consumer goods, while inflation is back on the sky.

Indeed, according to data released by the Minister of Infrastructures and Transportation, January sales were 42.450 (-44.8%), February was at 33.557 (-42.4%) and March at 32.288 (-53.8%) ending the Q1 with only 108.295 units, down 47.2%.

The start of Q2 was not better, with April sales at 29.712, down 52.9% and May with 26.791 units (-54.4%) with year to date figures at 164.798 (-49.6%).

 

Best selling Brands

As far as regard the competitive landscape, after having conquered back the leadership in the last months of 2018, the Japanese Honda is now creating a huge gap over all the others competitors. In the first five months of 2019, Honda sold 36.407 units (-38.9%) substantially gaining in terms of market share.

In second place the local brand Motomel, which overtook Zanella by few units, selling 23.041 units (-48.2%) and 14.0% of market share.

In third place the local icon Zanella, which was leader for 8 consecutive years before to lose the head of the market last year. Actually the Argentine brand is really in difficulties ending the first four months of the year with only 21.008 sales (-65.2%), while one year ago sales were aligned with Honda.

In fourth place Corven Motors with 19.878 sales (-42.6%) followed by Gilera with 12.251 (-45.5%), Keller with 10.985 (-13.4%) and Yamaha with 9.462 (-70.8%). 

In the market there are over 50 brands, including the Indian Bajaj Auto, actually in 9th place, and Hero, in 16th. Among the best, KTM is down only 9%.

 

Market Heritage

The Argentinian motorcycles market is one of the most interesting in Latin America, with sales hitting the milestone of half million sales in a single year in the 2014 and then jumped near 0.7 million in the 2017, when the “new deal” in the economy introduced by the President Macri, a strong sustainer of the automotive industry, achieved its peak.

In the 2017 this market was the fastest growing in the World with sales accelerating 44% hitting the new all time record of 688.647 and ranking as World’s 11th market and third in Latin America behind Brazil and Mexico.

Unfortunately, starting from the Q2 2018, Argentina was back in the middle of a financial crisis and the economy entered in recession with currency depreciation, raising inflation and the introduction of austerity measures which have killed the consumer’s demand in the entire automotive sector.

The two-wheeler industry was hit severely and the market started a fast drop since mid of the year ending the 2018 with relatively low lost (-15.9%, only thanks to the positive first half score. 

Indeed, according to data released by the Argentinian Minister of Transportation, the motorcycles and scooters sales in 2018 have been 578.749 (-15.9%) still at the second highest level ever for the market. However, the Q4 fall was heavy and the market fell down near 50% compared with the correspondent period in the previous year and the 2019 outlook is now almost negative with an expected fall between 20 and 25%.   

In the 2018 Zanella has celebrated the 70 years from the foundation. Originally an assembly company for auto produced by Peugeot and Fiat, entered the motorcycles sector at the end of the ’50 of last century, affirming their products as leader in the domestic market and exporting in the entire South America. Zanella was market leader in Argentina between the 2010 and the 2017.

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