INVEST WORKSHOP AUTO-PARTS SUPPLIERS IN ARGENTINA Lic. Martín Etchegoyen Manufactured Industries and ICT Secretary 2 AUTOMOTIVE Tradition, Innovation and High Skilled Labor INDUSTRY IN ARGENTINA MORE THAN 90 In 1925, Ford began the production of YEARS OF HISTORY the Model T in Argentina. 10 MANUFACTURING FACILITIES +500 Air conditioning systems, suspension MANUFACTURING systems, transmissions, braking and COMPANIES OF engine components, tires, bateries, oil AUTOMOTIVE PARTS and air filters, pumps, seats, etc. 3 AUTOMOTIVE PRODUCTION: 600.000 MANUFACTURING VEHICLES* 10% of the value added of the IN FIGURES manufacturing industry #22 world´s largest producer #3 Latam´s largest producer *Average production in the period ROSARIO 2013-2016 (SANTA FÉ) CÓRDOBA ZÁRATE-CAMPANA (BUENOS AIRES) 78.000 WORKERS + 150.000 in auto-parts EL PALOMAR manufacturers (BUENOS AIRES) PACHECO (BUENOS AIRES) REGIONAL MARKET: 3.7 M VEHICLES VIRREY DEL PINO (BUENOS AIRES) (Average sales in Argentina and Brazil in the period 2013-2016) EXPORT TO MORE THAN 15COUNTRIES + 500 INVESTMENT Manufacturing Companies ANNOUNCED of auto-parts USD 2,0 Bn Source: ADEFA, ANFAVEA, OICA and Ministry of Labor 4 AUTO-PARTS Main Companies in Argentina MANUFATURERS Interior Thermal, Chassis decoration electronic hinges, Body- parts & electric in-white systems stamping & Zarate assemblies (Bs As) Córdoba Loma Hermosa (Bs As) Exhaust Axles and Tires systems driveshafts Llavallol Córdoba Gran Bourg (Bs As) (Bs As) Seats / Seats, door Suspension Instrument panels systems panels / Door panels Rosario Campana (Santa Fe) (Bs As) Escobar (Bs As) Auto Glass Steering Wire Windshield systems harnesses and Side Escobar Escobar windows. (Bs As) (Bs As) Munro (Bs As) 5 AUTO-PARTS Local Companies MANUFATURERS Air Auto-parts, conditioning Wheel hand tolos systems and dies Río Grande Rosario (Santa Fé) Luján (Tierra (Bs As) del Fuego) Metallic Stamping & Wire structures assemblies harness and special equipment Escobar Córdoba (Bs As) Rosario (Santa Fé) Chassis Engine Molds and seals components and dies Córdoba JUNTAR Burzaco Córdoba SA (Bs As) Stamping & Pipe assemblies bending Córdoba Córdoba 6 INVESTMENT PROYECT ANNOUNCEMENTS A COMPLETAR USD 100 M Productivity improvement in Pacheco and Córdoba facilities. USD 250 M Improvements in Virrey del Pino facilities. USD 320 M Development of a new platform. Production starting in 2019. USD 500 M New exclusive platform and modernization of the facilities. USD 800 M Development of a new platform for a pickup truck in joint venture with Mercedes (Nissan NP300 Frontier - Renault Alaskan - Mercedes Class X). Investment announcements: USD 2,0 Bn Source: ADEFA 6 7 THE FUTURE OF THE AUTOMOTIVE INDUSTRY IN ARGENTINA VISION KEY STEPS Historical Agreement for the Automotive industry (Plan 1 millón) PRODUCTIVE COMPLEMENTARY SPECIALIZATION WITH BRAZIL Regime for the development and strengthing of autoparts manufacturing NEW MARKETS DEVELOPMENT New agreement with Brazil (extension of the FLEX regime) ↑ SCALE ↑ PRODUCTIVITY ↑ DEMAND OF LOCAL AUTO PARTS ↓ COST 8 HISTORICAL AGREEMENT FOR THE AUTOMOTIVE INDUSTRY “PLAN 1 MILLÓN” AGREEMENT COMMITMENTS • New regime for the development and strengthing y of national NATIONAL AND autoparts manufacturing SUB-NATIONAL • Review of the tariff structure • Strengthening the National Institute of Industrial Technology (INTI) GOVERMENTS • Promotion of training actions to encourage improvements in quality and productivity (JICA) • Optimization of the regulatory framework (LCM, CHAS, patenting) • Follow-up to the Agreement with Brazil in the framework of the Common Automotive Policy (CAP) • Promote access to widely used inputs at competitive prices and quality • International negotiations for the opening of new markets • Investment promotion program to develop "Flex-fuel" motorization, hybrids and electric vehicles UNIONS + • Strengthening R&D capacities COMPANIES • Job training program (SMATA, UOM) • Improve productivity and reduce absenteeism COMPANIES • Suppliers development (ADEFA, AFAC, • Investment program in new projects ADMIRA) • Price maintenance at levels similar to comparable economies 9 THE FUTURE GOALS “PLAN 1 MILLÓN” PLAN 1 MILLÓN 2013-2016 2019 2023 ANNUAL 1 PRODUCTION 600 K 750 K MILLION NATIONAL INTEGRATION LEVEL 25% 35% 40% GENERATED EMPLOYMENT + 30.000 JOB POSITIONS 9 10 REGIME FOR THE DEVELOPMENT AND STRENGTHING OF NATIONAL AUTOPARTS MANUFACTURING BENEFICIARES • Terminals and autoparts manufacterers REQUIREMENTS • New Project and mayor restyling • Existing projects: increase in productive capacity • Promoted local integration with foreign suppliers • Mercosur exclusive models BENEFITS INVESTMENT: > Fiscal credit bonus of 7% over local purchases of molds and dies > Eximition of imports taxes on molds and dies LOCAL COMPONENT: > Fiscal credit bonus of up to 15% over local autoparts purchase value (local parts may include imported imputs) > Bonus could rise if forging and casting proceses are integrated or «global» autopart manufacterers are developmented 11 MEASURES APPLIED FOR SECTOR STRENGTHING 1 LONG TERM CREDITS – BICE NEW COMERCIAL AGREEMENT 2 WITH COLOMBIA CREDITS WITH SUBSIDED RATES FOR PURCHASE OF VEHICULES 3 MANUFACTURED IN ARGENTINA ELIMINATION OF EXPORT TAXES ON 4 INDUSTRIAL PRODUCTS 5 INCREASE OF EXPORTS REFUNDS 12 FISCAL BENEFITS FOR CAPITAL INVESTMENT BENEFITS DESCRIPTIONS New production lines NO IMPORT DUTY FOR PRODUCTION LINES imports regime ( 0% IMPORT TAX) Used production lines REDUCED DUTY (6%) FOR USED imports regime PRODUCTION LINES Used capital goods PERMISSION FOR THE IMPORTATION OF RE- imports regime FURBISHED CAPITAL GOODS 13 OPPORTUNITIES FOR AUTO-PARTS SUPPLIERS Regional market Global production > Extension of the commercial platform for pickup trucks agreement with Brazil until 2020. > 7th world´s exporter (2013-2016) > Mercosur: 9th world´s largest > Toyota Hilux, Ford Ranger & VW producer (2,7 M vehicles in 2016) Amarok. > Joint venture Nissan- Renault- Mercedes (USD 600 M) Historical Agreement Development of the for the Automotive autoparts industry manufacturing > National and Sub-National (Law> 7% over No. local 27.263) purchases of molds Goverments, Unions and and dies. companies. > 7% up to 15% over local autoparts > Improvement in productivity and purchase value. insertion of the national Benefits applied to automotive production. factories and auto-parts suppliers.