New Transportation research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (ReleaseWire) -- 01/03/2013 --BMI has become increasingly bearish on Argentina's automotives sales and production outlook. Over the first three quarters of 2012, vehicle sales in Argentina declined 6% year-on-year (y-o-y), to 603,745 units. In the month of September, sales declined sharply, and this has driven down the year-to-date total. We believe that such large declines are unlikely to be repeated in the remainder of the year. BMI forecasts a 3% decline in this segment in 2012, predicated on our view of continued weakness in consumer sentiment due to high inflation and unemployment levels. We maintain this forecast for now, although we caution that ongoing downward pressures on consumer sentiment may prompt us to adopt a more bearish view on sales.

Based on the Argentine government's aggressive interventionist policies, BMI forecasts 2012 real GDP growth forecast of 3.0%. Real incomes will continue to feel the impact of high inflation, which we believe will average 23.5% in 2012. Moreover, the slowing in the broader economy leads us to believe that we will soon see an uptick in unemployment, which came in at 7.2% in Q212, further underpinning our conviction that Argentine consumers will tighten their purse strings throughout the year. We forecast unemployment to increase to 8.0% by the end of 2012. As a result, we believe that private consumption will grow at 3.5% in 2012, a marked slowdown from previous levels. Further, we believe that consumer price inflation will average 25% next year, and unemployment will end the year at 8.5%, which will see private consumption growth remain flat in real terms. This outlook has informed our bearish sales outlook (in both the passenger car and commercial vehicle segments); we caution, however, that ongoing downward pressure on consumer sentiment may prompt us to revise our 2012 sales forecast further.

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Vehicle production in Argentina declined 13% y-o-y over the first nine months of 2012, to 546,088 units. BMI forecasts an 18% decline over the year, based on ongoing weak internal and external demand, in addition to a generally poor business environment. This view is continuing to play out, and we maintain our production forecast for now.

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