Argentina. Zanella & Yamaha are collapsing in a market down 45%

Argentine Motorcycles Market

Argentine Motorcycles Market is collapsing hit by the economic and financial crisis and in the first ten months of the 2019 have lost 44% of volume, being the worst market globally. Honda has consolidated the leadership while Zanella dropped in fourth place, overtaken by Motomel and Corven. Yamaha is down over 60%

 

Economic Environment

Recent polls suggest Alberto Fernández’s Everyone’s Front (Frente de Todos) coalition is the clear favorite to win the 27 October general elections. Although there is considerable uncertainty over the economic program Fernández will implement, it’s highly probable that the new government will shift away from market-friendly policies. Meanwhile, national accounts data showed that the economy rebounded in Q2, growing for the first time in over one year, supported by a surge in exports and a softer contraction in the domestic economy. However, the recovery should prove short-lived. Despite positive figures for external balances in the first two months of Q3 and July’s uptick in activity, August’s financial drama most likely hit the economy hard.

The new political landscape has filtered into LatinFocus Consensus Forecasts, which sees the economy contracting in both 2019 and 2020. Plunging investment and consumer spending will rock the economy this year. Next year, the pace of contraction should ease, thanks to a softer fall in the domestic economy, but will remain sizable nevertheless.

 

2019 Market Trend

Starting from the all time record sales hit at the end of the 2017, the Argentine motorcycles industry is diving hit by the economic depression started during the 2018 and even strong. After the 2018 decline, mainly due to the Q4 huge fall, in the 2019 the market is one of the worse in the World losing near the half of the previous year volumes. 

Indeed, according to data released by the Minister of Infrastructures and Transportation, the year started with first quarter sales at only 108.295 units, down 47.2%. In the second quarter the trend unchanged, with April sales at 29.712, down 52.9%, May with 26.791 units (-54.4%) and June with 21.417 units, down 45.4%, ending the first half 186.215, down 49.1%.

Q3 figures are not better with sales lost in July-September by 22.1%, 31.2% an 45.6%.

The awful trend did not changed in October with sales at 23.967, down 36.2% and Year to Date September figures at 289.551 units, down a huge 44.5%

The country has been overtaken in the Latam ranking by Colombia while also Peru could surpass it during the rest of this year.

 

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 nine months of 2019, Honda sold 62.012 units (-32.7%) substantially gaining in terms of market share.

In second place the local brand Motomel, which overtook Zanella by few units, selling 35.780 units (-45.7%) and 13.5% of market share.

In third place Corven Motors with 30.563 sales (-41.3%) overtaken the other the local manufacturer, Zanella, which was leader for 8 consecutive years before to lose the head of the market last year. Actually this Argentine brand is really in difficulties ending the first four months of the year with only 30.507 sales (-65.4%), while one year ago sales were aligned with Honda.

In fifth place Gilera with 19.210 (-38.5%), Keller with 18.066 (-11.1%) and Yamaha with 16.601 (-62.6%). 

In the market there are over 50 brands, including the Indian Bajaj Auto, actually in 9th place, and Hero, in 16th. Among the best manufacturers, KTM is down only 19.3%.

 

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.

Is Honda reducing Argentina investments?

Honda Motor de Argentina S.A. that produces both automobiles and motorcycles will cease production of automobiles in 2020. Honda plans to use the additional production capacity for manufacturing motorcycles like its Supercub. The Campana, Argentina based factory employed approximately 1,000 people and produces approximately 148,000 motorcycles per year

Whether motorcycle production would remain the same, be ramped up for existing or new models is unclear. However, Honda’s website claims that the Campana factory currently produces its Biz 125 and Wave 110 models. Super-cub models made up approximately 40% of that total production which include also  9,111 Biz 125s and 47,473 Wave 110Ss. That means 60% of its production went to other motorcycle models. Unfortunately, Honda does not say which other models the factory produces and how the mix will change next year.

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