Auto Part Market in Argentina by Javier A. Chalian
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- Vehicles and Parts Statistic Report of December 2010
- Argentine Auto Part Market
- PROCEDURE FOR THE PROCESS OF THE IMPORT CERTIFICATE FOR AUTOPARTS AND RELATED (C.I.A.P.A.)
| Auto Part Market in Argentina
by Javier A. Chalian Auto Part Market in Argentina - Index………………………………………………………………………………………………………..……..2 - Introduction……………………………….………………………………………….…...………………......3 - Thai Auto Part Market………………………………………………………………….………….….……..5 - Argentine Auto Part Market…………………….……………………………………………….………….7 - Competitors………………………………………………………………………………………….…………13 - Importing Procedure………………………………………………………………………………………..17 - Importers………………………………………………………………………………………………………..20 - Conclusion………………………………………………………………………..…………………………….23 - Bibliography…………………………………………………………………………………………………….24 Introduction Analyzing world trade and production levels over the past decades, there is one industry that, unless there is a major crisis, tends to grow and expand constantly. The vehicle industry has been multiplying its factories, its clients, and its profits as globalization made it easy for a German car (Mercedes-Benz, Porsche, Audi, etc.) to be sold in China as for a Japanese car (Toyota) to be not only sold but also assembled in Argentina. This multi-billion dollar industry keeps expanding and generating growth opportunities to other industries that depend from it. It is in this context, where the auto part industry becomes an important link of the chain. The increase of car production worldwide tends to make the auto parts production, grow as well, as they grow side by side.
Source: Price Waterhouse Coopers sector report (January 2011). Thailand has been increasing its auto parts industry over the years and together with new investment and a number of measures like the recent elimination of the 5% import tax for parts traded within Asean, could help expand direct exports of parts from Thailand, not only to the region but also to the world1. Asean (Association of Southeast Asian Nations) currently consumes 40% of auto parts shipped from Thailand, with Indonesia and Malaysia among the top three overseas destinations for the industry along with Japan, other markets include India and the Middle East. Throughout the following report, we will cover a number of topics in order to analyze the market, the possibilities, requirements and other factors regarding the export of auto parts from Thailand to Argentina. Along side with the many advantages and opportunities that the Argentine market provides, we will inform about the current Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.), which can threat to reduce the amount of imported auto parts to Argentina. An outlook at the Thai vehicle and auto part market will be the first topic that we will covered. Its goals, strengths, figures and growth will be useful in order to have a general idea of where the Thai industry is standing. As the more than relevant vehicle production in Thailand grows side by side with the auto part market, year after year these closely related industries tend to move together, in Thailand and in numerous countries. Having briefly mentioned main aspects about Thai market, an introduction to the Argentine auto part market will follow. We will see how a high percentage of Argentine auto part production is destined to export to different countries, which therefore lead to an increase in imports. As the local auto part industry was not able to supply some of the local market’s demands (because of lack of required technology or because demand of certain products was not high enough for the investment required for factories), imports came as a perfect solution. An explanation on the Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.) will help to have an accurate idea of its reach and future repercussions for both the local producers, consumers and especially for the Thai exporters. By looking at the Argentine imports of several car part products not only in general but specifically from Thailand as well, will show exactly how imports have been growing over the last couple of years. Once we have this set of information in hand, we will see which countries have been the main foreign suppliers of the Argentine auto part market. Neighboring Brazil, has become the main competitor for the rest of the world when it comes to this market in Argentina, because of tariff reduction, low freight costs and special bilateral agreements, most categories find Brazil taking up from 50 per cent of the market onwards. However, while Brazil might be more competitive in some products, there are others where there is room for other countries to export auto parts either for car factories or directly for wholesale. A look through the importing requirements and procedures will follow paying close attention to the main concern which is the Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.). Its creation, specifications, and reach will be explained together with examples of the forms and specific regulations covered by it. Finally, we will list the Argentine importers depending on the type of product with their share of the yearly imports and their contact information. With this final link of the chain, we will then be able to put together the most relevant information gathered throughout this report as we come up to the conclusion. Thai Auto Part Market When going over the “Objectives” outline of the “Master Plan for Thai Automotive Industry Project” proposed by the Thailand Automotive Institute, we find the following four main objectives: 1 - Thailand will produce at least one million cars per year (700,000 one-ton pick-up trucks and 300,000 passenger cars) with total production value of more than 500 billion Baht. 2 - Thailand will produce at least two million motorcycles per year. 3 - Thailand will produce internationally-recognized and standardized replacement equipment manufacturing (REM) parts. 4 - Thailand will have capability to produce auto vehicles and parts with local value added of more than 60 percent within 2006. When contrasting these objectives with reality, we see that Thailand is undoubtedly accomplishing the expectations. From the year 2005 up to 2008 vehicle production (passenger cars, buses and trucks) surpassed the million units while last year, of global crisis, ended up with almost one million (999,378 units). When it comes to motorcycles, from the year 2003 until 2006 Thailand produced over two million units each year. Last year, also immerse in the global crisis period, the country produced 1,635,249 motorcycles. Regarding the auto parts, Thailand has increased over the past years the production and export of internationally-recognized parts as we can see in the figures in the “Thai Vehicle and Parts Exports (1996-2009)” chart. Thai Vehicle Production (1990-2010) 
Source: The Thai Automotive Industry Association Thai Vehicle and Parts Exports (1996-2010) 
Source: The Thai Automotive Industry Association OEM (Original Equipment Manufacturer) REM (Replacement Equipment Manufacturer) CBU (Cluster Box Units)
Exports of OEM auto parts represent an important asset for the Thai industry as these have a high export value that is nine times higher than REM items2. Thai exports of auto parts have grown an impressive 386% over the past 5 years, largely following the overall growth of automotive sector according to a 2008 report by the Thailand Board of Investment. The value of auto parts exported from Thailand was more than US$4 billion in 2007; representing a 55% increase over the previous year. Such growth is likely to continue, as the government works to push Thailand into the top ten automotive producers worldwide3.
Over the last couple of years, Argentine auto part industry has been shrinking and mainly concentrating on exporting as imported products have more competitive prices and they can adapt much better to the new vehicle models. Argentine auto part companies usually have a similar profile, they tend to be a family originated company (mostly Italian origin), medium sized (approximately 125 employees), old (there are companies over 70 years) and with a long tradition when it comes to exporting. There are around 400 companies dedicated to auto parts in Argentina, which tend to concentrate, as many other related companies worldwide, in two broad business lines. The first one is supplying large car manufacturing global brands, usually when they sign a contract to supply one of them in Argentina, they would probably also manage to export to different facilities of that same brand abroad. On the other hand, the second business line is that of selling and exporting auto parts for the replacement segment. The main markets for Argentine auto parts (some of them with a special tariff reduction to Argentina) are Brazil, United States, Spain, Mexico and Venezuela4. If we are going to look into the auto parts export possibilities to Argentina throughout this report, we should mention an important recent issue that should be taken into consideration. The Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.) has been established by the Argentine authorities as a way of helping the local auto part industry. The main reason for this is that they can not provide the quantity or in some cases quality of parts required by the Argentine market. One clear example of this is with clutches. As the car companies in Argentina do not assemble engines in the country, it is difficult for a local car part company to acquire the necessary technology and engineering requirements to develop such products. In addition to this, the volume of clutches needed nowadays in the country is not worth such an investment as to set up this type of company. This Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.), as we can see, was set up to help the local industry, reducing imports as it automatically sets up a new requirement to export to Argentina, however, it does not mean that there will be no more imports or that there are no foreign companies exporting auto parts to Argentina. One exception to this resolution can be seen with the vehicle manufacturing companies in Argentina, as they are not required to have this license in order to ensure the normal operation of automobile manufacturing processes. Together with this general sense of boosting the Argentine auto parts industry by the authorities, Argentina and Brazil have also signed agreements during the year 2009 to reduce auto part trade. Even though this measure will affect the auto parts imports in Argentina, it does not mean that imports are closed. While many local auto parts producers approve these measures and can benefit from them, there are many areas where they can not manufacture the pieces the country used to import, as we have mentioned before, because they don’t have the necessary technology or capacity to undertake the kind of product and volume of production needed. Many experts agree that sooner rather than later, the Argentine authorities will have to revise this set of policies as the local market will not have their demands fulfilled, as the local industries will not be able to produce certain products and imported ones will not be anything close to the volume needed to cover the demand5. Another aspect to take into account when exporting auto parts to Argentina is when it comes to vehicle security parts, such as shock absorbers, ball joints, bumpers and airbags to name just a few, as they require a special permit that the importer must request to the Industry Secretariat before importing them. Finally, the last issue to consider is the “criterion value”, as when importing some products from Asia, many of them arrive to the country with extremely low prices, the Argentine Customs has lists of minimum prices for several products. Therefore, for many car part products, if the declared value of the product is lower than the criterion price the Argentine Customs has, this later one would apply. This is relevant for both exporter and importer as the price of each unit/shipment modifies the Tax Base (which is the CIF value –FOB Cost, Insurance & Freight-), which is used when applying the different import duties. Amongst the auto part broad category, we must differentiate a couple of subgroups. To analyze this, we will see the different categories by general Harmonize System Code. Depending on the different interests to export auto parts from Thailand to Argentina, in the following pages we will see a brief analysis depending on the different subgroups. We will consider “auto parts” the products contained under the following Argentine HS Codes: 40.11.10, 40.11.20, 59.03, 68.13.8, 85.07.10 & 87.08. The following graph, shows how Argentine auto part imports have a growing tendency over the last years (HS Codes: 40.11.10, 40.11.20, 59.03, 68.13.8, 85.07.10 & 87.08) with a decrease during 2009 due to the global crisis that affected most industries and countries worldwide. 2003-2010 Auto Parts Imports - World-Argentina 
If we further analyze with more depth Argentine auto parts imports from Thailand during the same period of time, we will also find this growing tendency throughout the years. 2003-2010 Auto Parts Imports - Thailand-Argentina 
The first specific HS Code that we will go through is 40.11 (Rubber and articles thereof--tires [pneumatic tires] new) in general and to be more specific 40.11.10 (of the kind used on tourism-like cars [including family type -“break” or “station wagon-] and racing) and 40.11.20 (of the kind used on buses and trucks). 2010 Imports World-Argentina (HS Code 40.11.10 & 40.11.20) 
2010 Imports Thailand-Argentina (HS Code 40.11.10 & 40.11.20) 
When we analyze the taxes to be paid for importing this type of auto parts (HS Code 40.11.10 & 40.11.20), there is an Import Duty (Derecho de Importación Extrazona) of 16% and a Statistical Rate (Tasa Estadística) which is 0,5%, both of them applied to the Tax Base (which is the CIF value –FOB Cost, Insurance & Freight-). After this, depending on the importing company, they will have to pay all or only some of the following taxes: Aggregated Value (21%), Additional Aggregated Value Res. 3431/91 A (varies), Income Tax (varies) and Gross Income Tax (varies). The second HS Code that we will analyze is 59.03 (fabrics impregnated, coated, covered or laminated with plastics other than those of heading 59.02). 2010 Imports World-Argentina (HS Code 59.03) 
Regarding the taxes to be paid for importing this type of auto parts (HS Code 59.03), there is an Import Duty of 26% and a Statistical Rate of 0,5%, applied to the Tax Base. After this, depending on the importing company, they will have to pay all or only some of the following taxes: Aggregated Value (21%), Additional Aggregated Value Res. 3431/91 A (varies), Income Tax (varies) and Gross Income Tax (varies). The third HS Code that we will analyze is 68.13.8 (friction material [eg sheets, rolls, strips, segments, discs, washers, pads], not mounted, for brakes, clutches or friction, based on asbestos [asbestos] of other mineral substances or of cellulose, even combined with textile or other materials.). 2010 Imports World-Argentina (HS Code 68.13.8) 
For this type of product (HS Code 68.13.8), the taxes to be paid consist of an Import Duty of 14% and a Statistical Rate of 0,5%, applied to the Tax Base. After this, as we have previously mentioned for other products, depending on the importing company, they will have to pay all or only some of the following taxes: Aggregated Value (21%), Additional Aggregated Value Res. 3431/91 A (varies), Income Tax (varies) and Gross Income Tax (varies). The fourth HS Code that we will analyze is 85.07.10 (Electric accumulators, including separators, squared or rectangular - lead, the kind used for starting piston engines). 2010 Imports World-Argentina (HS Code 85.07.10) 
For this subgroup of auto parts (HS Code 85.07.10), the taxes to be paid consist of an Import Duty of 18% and a Statistical Rate of 0,5%, applied to the Tax Base. Depending on the importing company, they will also have to pay all or only some of the following taxes: Aggregated Value (21%), Additional Aggregated Value Res. 3431/91 A (varies), Income Tax (varies) and Gross Income Tax (varies). The fifth and final HS Code that we will look into is 87.08 (parts and accessories for vehicles of heading 87.01 to 87.05). 2010 Imports World-Argentina (HS Code 87.08) 
2010 Imports Thailand-Argentina (HS Code 87.08) 
For this final and important group of auto parts (HS Code 87.08), the taxes to be paid consist of an Import Duty of 18% and a Statistical Rate of 0,5%, applied to the Tax Base. Depending on the importing company, they will also have to pay all or only some of the following taxes: Aggregated Value (21%), Additional Aggregated Value Res. 3431/91 A (varies), Income Tax (varies) and Gross Income Tax (varies). Competitors When we analyze auto part competitors to both Thai and non Thai exporters, we clearly see how Brazil represents the main supplier to the Argentine market. Due to special bilateral tariff reductions between Argentina and Brazil, we will see that in every category, this neighboring country tends to be the number one foreign supplier to the Argentine market. With close to 60% of the Argentine imports from Brazilian origin the tires will be the first category that we will look into. The specific HS Code is 40.11 (Rubber and articles thereof--tires [pneumatic tires] new) in general and to be more specific 40.11.10 (of the kind used on tourism-like cars [including family type -“break” or “station wagon-] and racing) and 40.11.20 (of the kind used on buses and trucks). Argentine 2010 Imports (HS Code 40.11.10 & 40.11.20) 
The second category that we will mention is that of fabrics and its variations. The HS Code for this kind of products as mentioned earlier is 59.03 (fabrics impregnated, coated, covered or laminated with plastics other than those of heading 59.02) here Brazil represents almost 70% of the Argentine imports. Argentine 2010 Imports (HS Code 59.03) 
As we analyze a new category, this time of friction materials in general and for brakes and clutches in particular, Brazil this time takes 70% of the imports. The HS Code in this case is 68.13.8 (friction material [eg sheets, rolls, strips, segments, discs, washers, pads], not mounted, for brakes, clutches or friction, based on asbestos [asbestos] of other mineral substances or of cellulose, even combined with textile or other materials.). Argentine 2010 Imports (HS Code 68.13.8) 
One category that has little room for competitors is that of electric accumulators like the ones for starting engines, as in this category Brazil once again takes up most of the market with more than 86%. The HS Code in Argentina is 85.07.10 (Electric accumulators, including separators, squared or rectangular - lead, the kind used for starting piston engines). Argentine 2010 Imports (HS Code 85.07.10) 
Finally, when it comes to general auto parts and accessories, where Thailand does export to Argentina for USD 15 to 20 million per year, the biggest competitor is Brazil representing 57% of the Argentine imports during last year (for a total FOB value of over USD 600 million). The general HS Code for this sort of products is 87.08 (parts and accessories for vehicles of heading 87.01 to 87.05). Argentine 2010 Imports (HS Code 87.08) 
Importing Procedure In order to begin explaining the importing procedure, we must first state that the person/company that receives the goods in Argentina (the importer) must be registered to import. To do this, it has to be registered both in the DGI (Direcciòn General Impositiva - The Tax Authority) and the Direcciòn General de Aduanas (General Customs Division). As mentioned earlier in this report, there are some relevant requirements to import auto parts to Argentina. As the Argentine auto parts industry and its exports are not considered minor by the government, in order to protect in a certain way the local industry, Argentina requires, as we mentioned already, a Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.). On August 21st 2009, the Argentine Ministry of Production and Secretariat of Industry and Trade published under Resolution No. 337/09 the Non-Automatic Import License for Auto Parts known as C.I.A.P.A. (Spanish acronym for Import Certificate for Auto Parts and Related), effective since September 12th 2009. With this measure, Argentine authorities try to boost the local auto parts industry and to reduce very low priced imports. However, when it comes to reality, many argentine auto parts manufacturers can not supply many parts the local market needs. The main reason for this is that they can not provide the quantity or in some cases quality of parts required. This Non-Automatic Import License, tends to take some time to get which in practice ends up decreasing the imports as the process adds an extra, more bureaucratic, step in order to fulfill the final goal. Finally as we already noted in this report, but it is necessary to remind, the vehicle security issue should be previously considered before exporting since auto parts such as shock absorbers, ball joints, bumpers and airbags for instance, require a special permit that the importer must request to the Industry Secretariat beforehand. This issue, together with the “criterion values” (the minimum prices that the Argentine Customs states for several products) should be looked upon when planning to export auto parts to Argentina. Even though the Argentine importer is the one that should request this certificate/license, the following are the requirements and the specific form, in order to have a better idea of the entire process.
Model of application form for the “Import Certificate for Auto Parts and Related (C.I.A.P.A.)” Importers Argentine 2010 HS Code 40.11.10 & 40.11.20 Importers 
Argentine 2010 HS Code 59.03 Importers 
Argentine 2010 HS Code 68.13.8 Importers 
Argentine 2010 HS Code 85.07.10 Importers 
Argentine 2010 HS Code 87.08 Importers 
Conclusion Amongst the multiple variety of products that Thailand exports to Argentina, auto parts constitutes one of importance. Not only because of the wholesale market, but also because of the different important vehicle companies established in Argentina assembling cars, the need for auto parts is constant. As we have seen throughout this report, the opportunities are interesting, the import numbers have kept a growing tendency over the last couple of, the Thai vehicle and therefore auto part market has been growing and there are Thai auto part companies that export on a regular basis to Argentina. Even though all this information is encouraging, we have also mentioned the Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.) which can act as a barrier or an import reduction measure. At the beginning of this report, a brief analysis of the Thai vehicle and auto part market, contributed on getting a basic idea of the volume and real production capabilities of this industry in Thailand. By setting and meeting short, medium and long term goals, producers and exporters will increase their capabilities and therefore profits. By having a good glance at the Argentine auto part market, we could then see how these two countries could benefit from mutual trade. Even though most of the Argentine production was destined for export, since the year 2009 due to measures taken buy the Argentine authorities, this figures have been varying. With the implementation of Resolution No. 337/09 effective from September 12th 2009, the Non-Automatic Import License or Import Certificate for Auto Parts and Related (C.I.A.P.A.) was introduced as a way to help the Argentine local auto part industry to increase its participation as local suppliers. While in some cases it has worked, in many other the Argentine producers can not do much as they do not have the necessary technology or capability to produce certain parts. With the pros and cons mentioned, and the importing figures shown earlier, we can still see that there are many auto part imports in Argentina as for many cases the local producers can’t produce or can’t offer a price as competitive as the foreign suppliers do. As it happens with many products, Argentina’s neighboring giant Brazil, is the main foreign supplier when it comes to auto parts. The rest of the competing countries such as China, Uruguay, Italy, Germany for naming a few are still far from Brazil’s figures as this country takes up 50 to 90% of the imports, depending on the product category. A specific guide of the forms and other requirements requested by the Argentine authorities was also given in order to know exactly the documentation needs needed to import auto parts in Argentina. Coinciding with import requirements for other products but also differing when it comes to Import Certificate for Auto Parts and Related (C.I.A.P.A.) or vehicle security products (needing a special permit before the Industry Secretariat before importing), importing procedures are more than relevant to avoid any confusion or misunderstanding. Finally, after acquiring all the necessary information about exporting auto parts to Argentina, a thorough list of the Argentine importers, with the correspondent contact information, has been included in this report in order to provide the last link of the chain. Having a competitive advantage on this type of products, Thailand is undoubtedly an ideal supplier for the Argentine auto part market. Trade between the two countries in this area has been fluent in the past and, despite the Non-Automatic Import License requested by Argentina, should continue to be interesting trade partners in the future.
- The Nation - Nationmultimedia.com - La Nación – Lanacion.com.ar - After Market - Aftermarket.com.ar - Customs.go.th - Thailand Board of Investment - Asociación de Fabricantes de Autocomponentes (Association of Auto Components
- División General de Aduanas Argentina (General Customs Division Argentina) - Ministerio de Economía de la Nación (Argentine Finance Ministry) - Ministerio de Relaciones Exteriores, Comercio Internacional y Culto (Ministry of Foreign Affairs, International Trade and Worship) 1 http://www.bangkokpost.com/business/economics/30497/asean-integration-aids-parts-makers 2 http://www.nationmultimedia.com/2010/01/25/business/business_30121040.php 3 http://www.boi.go.th/english/why/auto_parts_summary.pdf 4 http://www.lanacion.com.ar/nota.asp?nota_id=961086 5 http://www.aftermarket.com.ar/index.php?act=vernota¬a=705 Directory: contents attach contents attach -> China, Japan and Mexico invest us$200 million in automotive plant in the country contents attach -> 23rd February 2017 Thai Trade Center, Buenos Aires By Guillermo H. Rivarola contents attach -> Th October 2015 Thai Trade Center, Buenos Aires By M. Fernanda López Ortiz contents attach -> China's byd moves to Build Auto Assembly Plant in Bulgaria Download 155.55 Kb. Share with your friends:
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