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Argentina Automotive Industry Investment Opportunities: March 2019 Update

Discover reasons to invest in Argentina's automotive industry with competitive advantages, government support, market potential, and key indicators for a lucrative investment opportunity.

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Argentina Automotive Industry Investment Opportunities: March 2019 Update

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  1. WHY ARGENTINA AUTOMOTIVE INDUSTRY MARCH 2019

  2. REASONS TO INVEST IN AUTOMOTIVE INDUSTRY IN ARGENTINA GOVERNMENT SUPPORT COMPETITIVE ADVANTAGE • Tax benefits to foster local autoparts production and capital investment • Opening of new markets • Mature and experienced automotive industry • 11 manufacturing facilities in the country • Companies are investing to expand their current operations POTENTIAL MARKET • Plan “1 Million” in place to expand local production • Trade agreement to export automotive to Brazil • Terminals developed growing short and mid term demand for autoparts

  3. ARGENTINE AUTOMOTIVE INDUSTRY OVERVIEW MAIN INDICATORS • JAN - DIC 2018 • PRODUCTION 466,649vehicles • EXPORTS 269,360 vehicles / +28.5% YoY +69% exportsto Brasil • NATIONAL SALES 802,992vehicles 5% of the production oriented to the domestic market • FINANCED SALES 381,186 vehicles They represented 47.5% of operations. The savings plans represented 48.1% of the sales financed and 22.8% of the total market

  4. AUTOMOTIVE INDUSTRY IS HIGHLY DEVELOPED THERE ARE 11 MANUFACTURING FACILITIES • PRODUCTION: 557,971VEHICLES* 10% of thevalueadded of themanufacturingindustry #22 world’ s largestproducer #3 Latam’ s largestproducer ROSARIO (SANTA FE) CÓRDOBA LABOR 78,000WORKERS EL PALOMAR (BUENOS AIRES) 150,000+ in auto-partsmanufacturers EXPORTS 15COUNTRIES 500+ MANUFACTURINGCOMPANIES OF AUTO-PARTS • INVESTMENTS: USD 3,2BN+ IN 2018-2020 Sources: ADEFA, ANFAVEA, OICA and Ministry of Labor *Averageproduction in theperiod 2013-2018 ** Average sales in Argentina and Brazil in theperiod 2013-2018

  5. THERE ARE USD 3,3BN ANNOUNCED INVESTMENTS FOR MANUFACTURING USD 500 M New exclusive platform and modernizationofthefacilities USD 500 M Developmentof a new model in Rosario facilities USD 150 M Developmentof a new model in Virrey del Pino facilities USD 700 M • Developmentof a new platformfor a pickup truck in jointventurewith Mercedes Benz (Nissan NP300 Frontier - Renault Alaskan - Mercedes Class X) USD 320 M • Developmentof a new platform. Productionstarting in 2019 USD 100 M New Kangoo platform in Santa Isabel facilities USD 800 M Productivityimprovement in Pacheco facilities and developmentof a new enginesproduction line in Córdoba facilities USD 100 M Increaseproduction in Zarate facility *Since 12/11/2015 Sources: AITPA

  6. THE GOVERNMENT HAS A PLAN IN PLACE FOR THE AUTOMOTIVE INDUSTRY VISION PRODUCTIVE COMPLEMENTARITY WITH BRAZIL SPECIALIZATION • KEY STEPS • HistoricalAgreementfortheAutomotiveindustry(Plan 1 Million) • Regimeforthedevelopment and strengthing of autopartsmanufacturing • New agreementwithBrazil(extension of the FLEX regime) NEW MARKETS DEVELOPMENT SCALE PRODUCTIVITY DEMAND OF LOCAL AUTO PARTS COST Source: SecretaryofIndustry

  7. HISTORICAL AGREEMENT FOR THE AUTOMOTIVE INDUSTRY “PLAN 1 MILLION” NATIONAL AND SUB-NATIONAL GOVERNMENTS UNIONS COMPANIES • Suppliers development • Investment program in new projects • Price maintenance at levels similar to comparable economies • New regime for the development and strengthening of national autoparts manufacturing (with a focus on exclusive regional platforms) • Review of the tariff structure • Strengthen the National Institute of Industrial Technology Promotion • Training actions to improve quality and productivity (JICA) • Optimize the regulatory framework (LCM, CHAS, patenting) • Follow up the agreement with Brazil (CAP) • Promote access to widely used inputs at competitive prices • Opening of new markets • Programs to develop new motorization technologies (hybrids, electric vehicles and biofuel, hydrogen) • Strengthen R&D capacities • Job training program • Improve productivity COMMITMENT PLAN 1 MILLION 2013-2016 2019 2023 ANNUAL PRODUCTION 600 K 750 K 1 MN NATIONAL INTEGRATION LEVEL 35% 40% 25% GENERATED EMPLOYMENT + 30.000JOB POSITIONS

  8. MARKED OPPORTUNITIES FOR LOCAL INTEGRATION, BASED ON GLOBAL TRENDS AND ARGENTINA’S CAPACITY IN AUTOPARTS BODY PARTS (PROCESS OF HOT-STAMPING) PARTSOF SEATS BATTERIES AND ITSPARTS HEADLIGHTS GEAR BOX GLASS ELECTRONIC CONTROLLERS/ SENSORS PARTS OFWIRE HARNESS ONBOARD COMPUTERS/ INFOTAINMENT MOTOR BLOCK ANDOTHER ALUMINUM FOUNDRYPARTS TIRES ALLOYWHEELS SHORT TERM LONG / MEDIUM TERM 8

  9. Measures applied to streghten the sector LOW RATE CREDITS FOR PURCHASE OF VEHICLES MANUFACTURED LOCALLY REDUCTION OF IMPORT DUTIES TO NEW TECHNOLOGIES NEW COMERCIAL AGREEMENT WITH COLOMBIA • Development and strengthening of autoparts manufacturing Beneficiaries • Terminals and autoparts manufacturers Requirements • New Project and mayor restyling • Existing projects: increase in productive capacity • Promoted local integration with foreign suppliers • Mercosur exclusive models Benefits for investment • Fiscal credit bonus of 7% over local purchases of molds and dies • Exemption of imports taxes on molds and dies Benefits for local component • Fiscal credit bonus of up to 15% over local autoparts purchase value (local parts may include imported inputs) • Potential bonus if forging and casting processes are integrated or “global” autopart manufacturers are developed • Fiscal benefits for capital investment • New production lines imports regime: No import duty • Used production lines imports regime: Reduced duty (6%) • Used capital goods imports regime: permission to import re-furbished capital goods • Fiscal benefits for electric, hybrid and fuel cell (hydrogen) vehicles • New electric vehicles: Reduced duty (2%) • New hybrid vehicles: Reduced duty (5%) • New fuel cell (hydrogen) vehicles: No import duty 9

  10. HOW WE CAN HELP We promote the internationalization of Argentine companies and facilitate private investments in Argentina OUR SERVICES: NETWORKING DUE DILIGENCE SUPPORT IDENTIFICATION OF OPPORTUNITIES AND LOCATION FACILITATION IMPROVEMENT OF BUSINESS CLIMATE AFTERCARE 10

  11. FOR MORE DETAIL ABOUT INVESTMENT OPPORTUNITIES WHERE IN ARGENTINA SELECTED INVESTMENT OPPORTUNITIES WHY ARGENTINA BY SECTOR DOING BUSINESS IN ARGENTINA

  12. Francisco Urangafuranga@inversionycomercio.org.arMariano Milletmmillet@inversionycomercio.org.ar María Melinsky mmelinsky@inversionycomercio.org.ar Francisco Lafuenteflafuente@inversionycomercio.org.ar Phone: +54 11 5239 4490 welcome@investandtrade.org.ar

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