The current state of the Argentinean aftermarket is defined by a series of factors that make it unique. We will try to make a brief summary that allows us to share the main variables that define our market:
At the level of the circulating parc of passenger vehicles, the sharp drop in the 2020 new car registrations added to the fall recorded in 2019 has important consequences:
- The average age of vehicles increases significantly and generates a larger segment of an aging parc. The progressive aging of the parc and in particular the emergence of the parc that is 10 to 14 years old (which almost doubled in 3 years) makes it necessary to reflect on strategies and product portfolios suitable to it.
- The element of “loyalty” enjoyed by the official networks managing warranty jobs loses it potency due to the drop in new car registrations. The dealership will be face great challenges by the shrinking of the youthful parc where they have guaranteed work.
- The parc size overall has remained stable, meaning that it stopped increasing with the previous pace it was growing, which represented a stimulus for aftermarket growth potential in the years prior.
The segment of light commercial vehicles presents a particular evolution where the growth of the weight of the pickups is noticeable:
The fleet of light commercial vehicles encouraged by the phenomenon of the pickups offers a different view and with better perspectives than the rest of the vehicle segments, since it is the one had the smallest decline in 2020 and increases its weight of yearly registrations each year. It is important to consider that this growing segment contains heavy users and fleets, which naturally means that it will have specific requirements linked to high milage. The offer needs to be adapted for this segment to take these requirements into account.
The fleet of alternative engines in Argentina does not have significant weight, just like the rest of Latin America, despite its growth. This is likely to remain the case even in the medium-term future.
At the level of car useage, the pandemic and the restrictions imposed lead to the reduction of the annual mileage travelled to unprecedented lows, also changing behaviour around the way of working (more working from home) and the use of the vehicle; which has a direct negative impact on the aftermarket. Although the level of kilometers driven per year is recovering, it is difficult to match the pre-pandemic level in the foreseeable future.
Considering the channels and frequentation, it is important to note that the percentage of drivers that did not visit any channel throughout last year increased and also the proportion of drivers that had multiple workshop entries has also reduced. All channels suffered from reduced traffic of drivers in part due to the pandemic and the long lockdown; as well as the economic crisis that has hit the driver’s pocket.
Maintenance requirements decreased by almost a third due to lockdown and downsizing. Gradually the level is improving and a recovery of the annual km travelled and the number of entries to channels is expected, but still without achieving pre-pandemic levels.
Permanent inflation: the daily increase in prices is a constant reality that has existed in Argentina for several years. The price increase is permanent and creates a lot of heterogeneity in the supply of services.
Price sensitivity and the search by drivers for promotions is maintained. The main reasons that drives for this are: the impact of the crisis, the inflation of prices, the increase in the share of the oldest parc (containing drivers with less budget) and the search for financing and stretching of payments terms.
The use of the internet is growing, but it is still not strong, although the upward trend is maintained, it does not increase as in other items.
Lack of availability: the disequilibrium of the trade balance is fought with restrictions on the entry of imported products that complicates the availability of products in several sectors, and is another factor that determines the current Argentine context.
The effect of the COVID19 added to the economic crisis, persistent inflation, the problems of availability. These combined factors are proving a constant challenge to the possibilities of the industry, creating a difficult reality that needs to be overcome in the future. Even so, we expect a better 2021 than 2020, which for now is good enough, even without regaining pre-pandemic levels.