Goodbye to a chosen one: because of the internal taxes, a very popular car was not sold in Argentina

NOVEMBER 13, 2020
Volkswagen withdrew the Vento GLi from its offer in Argentina

Volkswagen withdrew from its offer in Argentina the Vento GLi, a model that was on sale since mid 2019. It is the version with sports intentions of the famous medium sedan that is already in its seventh generation (it is the third under the name Vento).

The Volkswagen Vento GLi is no longer in the official price list of the German brand in Argentina. The only version available of the Vento from now on is the Highline 250 TSI AT, which is equipped with a 1.4 liter turbo petrol engine of 150 hp and is worth $3,285,200.

Although Volkswagen Argentina did not publicly give the reasons why it discontinued the Vento GLi, all roads lead to internal taxes, which crudely affect the price of the 0 km and distort the market.

The GLi was the most expensive variant of the range because it came with a 2.0 liter turbo petrol engine with double injection, capable of delivering up to 230 horsepower and 350 Nm of torque at only 1700 rpm. And it also brought exclusive design and equipment.

During the last months, Volkswagen was selling the last units in stock. And, when they ran out, it decided to discontinue it because its price, altered by the internal tax on "luxury" cars, would be too high for local consumers. The tax update was in August

The internal tax was updated in August by the AFIP. From that moment on, the first stopover must be taxed at 0 km, which is more than 2 million pesos in price to the public.

The measure established that they will pay a 20% tax (real impact of 25%) on the 0 km that have a wholesale price higher than $1,451,300, which means approximately $2,000,000 to the public. The second category taxes 35% (actual impact of 35%), and includes vehicles that exceed the wholesale price of $2,679,323, which is approximately $4,400,000 to the public.

As the taxable base does not keep pace with inflation, more and more cars in Argentina are affected by this tax. And one of the consequences is the discontinuation of the market for models or versions whose values are distorted to a greater extent. Companies choose not to sell them rather than at derisory prices, since demand would not respond.

For dollars and import barriers, dealers do not sell cars

Crisis, uncertainty, sales that fall because of the market situation itself rather than because of the indifference of consumers. This is how the economic and social reality that directly affects the sale of units is experienced today in car dealerships throughout the country.

The impressive increase of the blue dollar, which took a $100 advantage from the official, directly hits the automotive industry, which imports models or manufactures them in the local market with parts that, in their majority, are from other countries. In any case, they need dollars to work, and today getting them is practically impossible.

According to dealer estimates, about 4,000 fewer cars will be sold in October than last September, when the patenting recovered from August. However, they do not plan to fire up the operations more than usual, as they have done with promotions and discounts, but, on the contrary, they have kept the few units they have left under seven keys, waiting to see what will happen to the dollar and how they will be able to recover stock.

That's not all, in addition to the doubts that exist about how much the vehicles will be sold next month, the obstacles to import are growing and it is increasingly difficult to predict what stock will be available to work with.

"Today the best thing we can do is to keep the few units we have until the market settles in. To sell a car is to decapitalize ourselves, because surely they cannot be bought again for the same value, or even for a slightly higher percentage," explained in a dealership. On the other hand, they admitted that the only possibility is to promote the sale of models produced in the country, although the fear of running out of imported parts is also latent all the time, which could stop domestic manufacturing.

"For the moment we have parts to manufacture in the local terminals, but it is a double-edged sword and it is also unknown how long the auto parts dealers will be willing to sell us without knowing how prices will continue in just days or weeks," they explained from a terminal.

The truth is that cars are quoted at the official dollar for sale, and that gap with the blue dollar was key to selling more these months. However, today it is no longer a motivator and the dealers prefer not to speculate with those differences, but rather that the car kept in their salons is the best safeguard of capital, they warn iProfesional.

Problems to import

In addition to needing to save cars to prevent the rise of the dollar from impacting the business, the problem faced by many brands is the complications of importing vehicles.

In this regard, the BCRA imposed new rules that require more authorizations for cars to enter the country.

The decision was taken a few days ago, when through a communication from the Central Bank, the clampdown on car imports imposed by the government since June was further tightened. It was established that all imports exceeding US$ 50,000 must be approved in advance by the BCRA.

This is a special permit to access the foreign exchange market and will be granted for each specific import operation. Until now, there were no restrictions by the Central Bank to issue foreign currency for the payment of vehicles purchased abroad, but the decision was in the hands of the Ministry of Industry, where a "red light" ("observed") or "green light" ("exit") was given in the Integral Import Monitoring System -SIMI-.

However, access to the foreign exchange market was free and allowed for the payment of vehicles abroad, pending SIMI approval for their release from Customs. Now the process has been completely reversed: first we have to wait for the "exit" of the SIMI and wait for the Central Bank to approve the release of foreign currency for the payment of vehicles. Only then will the process of buying and sending cars to the country begin.

This is a new lock to the customs trap, as it happened in the times of Guillermo Moreno's Advance Sworn Import Declarations (DJAI).

The president of an importer said about this: "About the measures, when asking for SIMI in EXIT status to be able to pay I understand that the banks could ask for it to open the letters of credit so the operation is complicated in terms of time. To place the order will have to have the SIMI approved and the order is placed 5 months before the arrival of the vehicle in the country. That is why it would be necessary to work with greater predictability by the Ministry of productive development and SIMI authorizations to place orders. This could lead to a lack of products in the market.

"If the system works well, there should be no major drawbacks. In other words, all actors must work well so that the cycle of authorization, order, production, payment, nationalization and wholesale and retail sales is harmonious. To avoid delays, at this time SIMI should be approved for cars that arrive in January/February 2021, something that was not foreseen," he added.

Source: IProfesional

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