Tax exempt: pick-ups benefited and will gain even more market in Argentina

[Inkriql]

In December 2013, when the then president Cristina Kirchner applied a sharp increase for internal car taxes, Autoblog predicted in this note: "Tax exempt: forecast a boom in pick-up sales."

The forecast did not fail and was the beginning of a phenomenon that lasts until today: the pick-ups gained market share against sedans and SUVs. They became family vehicles, not just work anymore. And the Toyota Hilux was crowned as the best-selling vehicle of any kind in Argentina.

Because they are approved as "commercial vehicles", originally intended for work, pick-ups were always exempt from internal taxes. The same goes for trucks, buses and agricultural machinery. With this benefit, the most modern and equipped pick-ups - with levels of comfort and technology that many cars would envy - became the purchase option for many families, who in another tax context would have opted for a sedan or an SUV.

With the changes in internal taxes already approved by Congress (see new scales and prices), the automakers grouped in Adefa now negotiate a possible patch: they ask that nationally produced passenger vehicles (such as Chevrolet Cruze and Toyota SW4) remain exempt from this tax. It is that this tax would also be a blow to new industrial developments, which are already very advanced, such as the VW Tarek Project (see notes) and the A.V.A. Chevrolet (see notes), two SUVs that should pay internal taxes.

However, if Adefa manages to achieve this benefit for the "nationals", an intern would be unleashed among the automakers. In case of achieving it, the importers grouped in Cidoa already anticipate that they will complain to the Justice for a “discrimination by origin”, something that the Argentine Commercial Law does not allow.

Six years after that first “pick-up boom”, the Argentine car market is even more prepared to repeat the phenomenon. The offer of urban pick-ups and car benefits increased, although always with the tax benefit: in 2014 there were no models such as the Fiat Toro, Renault Duster Oroch and several more compact pick-ups that are yet to come.

It is also likely to repeat a phenomenon that was already lived at that time. Despite being exempt from internal taxes, the pick-ups of all brands experienced strong price increases. Upon discovering the strong demand they had, brands and dealerships increased profit margins in that segment, to compensate for what they were losing in others.

As of January, when the new internal taxes begin to apply, the Argentine car market will experience phenomena rather than curious. For example, the sport vehicle with the best price / power ratio in the country will be the new Ford F-150 Raptor. With 456 horses and 85 thousand dollars (at the official exchange rate and exempt from the tax) it will be well below other more traditional sports cars.