ASOCIACIÓN DE FÁBRICAS ARGENTINAS DE COMPONENTES

INVESTMENT IN AUTOPARTS IN ARGENTINA

June 2011

Viamonte 1167, 2do. piso. Buenos Aires, ARGENTINA

Tel. +54 11 4375-0516 Fax +54 11 4814-3434

E-mail: afac@afac.org.ar

www.afac.org.ar

LEADING INDICATORS

Source: AFAC.

2010Number of auto components companies 400Direct Employment (P) 60.378Share in the industrial employment % 5,2%Sales (millons U$S) (P) 5.920Share in GDP % 0,5%Share in industrial GDP % 3,3%Exports FOB (millons U$S) 2.422Share in industrial exports % 10,2%Notes: (P): Proyected

THE SLOPE OF THE PRODUCTION FROM 2008-2009 WAS THE HIGHEST RECORDED AFTER A CRISIS

Fuente: ABECEB.COM.

2010716.540

Monthly and annualized production. Units Vs 2009: +39,7%vs 2008: +20,0%

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

19961997 1998 1999 20002001 2001 2002 20032004 2005 20062006 2007 2008 200920100

100000

200000

300000

400000

500000

600000

700000

800000

Monthly production (Ieft)

Annual production (right)

Polinomic monthly Production (left)

VEHICLE PRODUCTION IN 2010 WAS ALSO  A RECORD FOR MOST OFTHE AUTOMOTIVE COMPANIES

Fuente: ABECEB.COM

Vehicle production by makers. Units

22,5

%

20,4

%

17,2

%

12,6

%

11,7

%

8,6

%

3,7

%

1,7

%

1,5

%

0%

5%

10%

15%

20%

25%

GM

PSA VW

Renau

lt

For

d

Fia

t

Toy

ota

MB

Iveco

Car segment A, B48,7%

Pick Ups29,2%

Car segment D, E11,7%

Commercials7,1%

Others3,4%

Less than 4 ayears77,4%

More than 4 years22,6%

Share of production of vehicles by maker, segment and age

Production ShareVar %.

10 vs. 09Var %

10 vs. 08Maximun (year)

General Motors 127.818 17,8% 55,9% 14,2% 127.818 2010PSA 126.968 17,7% 48,6% -3,7% 131.791 2008Ford 96.454 13,5% 32,9% 15,3% 96.454 2010Fiat 96.059 13,4% 22,3% 234,7% 96.059 2010Renault 91.222 12,7% 39,3% 24,4% 91.222 2010Volwagen 87.073 12,2% 67,3% 37,9% 87.073 2010Toyota 70.032 9,8% 12,0% 8,5% 70.032 2010Mercedes Benz 16.461 2,3% 26,4% -49,8% 26.108 2007Iveco 4.453 0,6% 239,7% -38,0% 7.179 2008TOTAL 716.540 39,7% 20,0%

2011 GROWTH PROSPECTS 17,3% VS 2010

Source: ABECEB.COM

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

ene feb mar abr may jun jul ago sep oct nov dic

2008 2009 2010 2011

Vehicle production. Units

4M2011 vs 4M2010+27,8%

-1,2%

0,4%

1,2%

2,4%

3,2%

3,6%

7,2%

23,2%

26,9%

33,0%

-10% 0% 10% 20% 30% 40%

Ford

Iveco

Mercedes Benz

Toyota

Honda

General Motors

Fiat

Renault

PSA

Volkswagen

Contributions to the estimated growthin 2011 by company ( %)2011

864.600(+20,7%)

Increased production prospects are based on the expected demand pull and the major launching of new models : This year, Fiat has announced the second shift of production, jumping from 400 cars per day to 650. Mercedes Benz will also beguin a second shift of production from August (Sprinter, bus chassis and the new truck.)PSA began in March the production of 408 and Renault will go into full production regime of Fluence and will add a new production shift this year. Volkswagen Pick-up will also come into full production in 2011 an exports will increase by 77% between 2011 and 2012.

In March Honda began production of the City model in its plant in Campana. 

Production recovers from the crisis in 2009 using idle

capacity, optimizing working shifts and

increasing productivity.

0

200

400

600

800

1.000

1.200

1.400

2007 2008 2009 2010 2011e 2012p 2013p

Capacidad instalada

Producción

INSTALLED CAPACITY

54%58%

50%

67%69% 75% 80%

Installed capacity in the automotive industry. Industry and companies. %

Last year, that process began to

show signs of exhaustion and some makers

announced by the end of the year the addition of

new production shifts (Fiat, Renault).

In 2011 it becomes necessary

to increase the installed capacity, especially in some

companies (Toyota, GM)

47%

55%

56%

58%

60%

67%

67%

82%

100%

40% 60% 80% 100%

MB

Ford

Iveco

Renault

VW

Fiat

PSA

GM

ToyotaInstalled capacity

Production

STRONG GROWTH OF DOMESTIC AUTO SALES

The growth of domestic demand in 2010 had its main support in:•Strong growth of economic activity (+8.9%)•Postponed consumption trailing from the 2008-2009 crisis•The few investment opportunities that existed last year to preserve the value of money•A significant recovery in financial instruments involving the purchase of vehicles (sales financing peaked in 2010: 36.3%)

2010662.576

Vs 2009: +28,7%vs 2008: +8,5%

Registrations. Monthly and annualized. Units

0

20000

40000

60000

80000

100000

120000

1996199619971998 1999200020012001 20022003200420052006 20062007200820090

100000

200000

300000

400000

500000

600000

700000

Monthly registrations (left)

Annualized registrations (right)

Polinomic monthly registrations

1998446.710

200295.283

2008610.778

Source of growth by segment, brand and model (in % 4m2011-4m2010)

1,2%

1,3%

1,5%

1,5%

1,6%

1,6%

2,1%

2,2%

5,0%

5,0%

5,9%

10,6%

12,5%

13,7%

16,6%

17,7%

0% 5% 10% 15% 20%

Resto

Dodge

Honda

Iveco

Chery

Toyota

Mercedes Benz

Hyundai

Fiat

Citroen

Nissan

Chevrolet

Ford

Peugeot

Renault

Volkswagen

2,8%2,9%

3,4%3,6%

4,2%4,5%4,5%

4,9%5,6%5,8%5,9%

7,8%

0% 2% 4% 6% 8% 10%

Chevrolet CORSAFord FOCUS II

Renault LOGANRenault SANDEROVolkswagen BORAPeugeot PARTNER

Chevrolet AVEOPeugeot 207Renault CLIO

Ford ECOSPORTVolkswagen FOX

Volkswagen AMAROK

New models:Fiat Uno 2010 Chevrolet MontanaFord Fiesta Kinetic Chery QQRenault Fluence Renault Megane IIIPeugeot 408 Audi A1Chevrolet Cruze Citroën DS3Nissan Sentra Ford Transit

Gama Baja Gama Media Com. Liv. Monovol. SUV Resto

Var. 4M2011 / 4M201062.887units

44,1% 19,6% 15,6% 8,4% 4,9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

71,1% of registrations

56%Of the growth

Source: abeceb.com and ACARA

REGISTRATIONS

Segment C, D, E Segment B Lights Comm. MPV-C Suv Others

1998237.497

2003108.158

2008351.092

2010447.953

-58,6%

+256,9%

2009322.495

Vs 2009: +38,9%Vs 2008: +27,6%

Record sales in Brazil and Argentina increased participation in vehicles in that market vehicles joined with the recovery in other places to achieve a rise of almost 39%

over 2009 and 27.6% over the previous maximum 2008

199998.362

-8,1%

EXPORT OF VEHICLES MONTHLY AND ANNUALIZED. UNITS

0

10000

20000

30000

40000

50000

60000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

Monthly Exports (left)

Annualized exports (right)

Polinomic monthly exports (left)

AUTOMOTIVE PRODUCTION DESTINATION. 2010

Brazil growth quantitatively

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

500.000

2008 2009 2010

A RM A Brasil

71%88% 85%

29% 12%

15%

IVECO

MB

TOYOTA

VW

RENAULT

FIAT

FORD

PSA

GM

Exportaciones Mercado interno

62% 38%

48% 52%

72% 28%

83% 17%

53% 47%

56% 44%

70% 30%

70% 30%

15% 85%

127.818

126.968

96.454

96.059

91.222

87.072

70.032

16.461

4.453

2008 20101 16,4% 17,7%3 36,5% 43,7%5 53,5% 59,3%10 83,6% 87,0%15 94,8% 98,1%25 100,0% 100,0%

Antigüedad

(meses) 83 58

ConcentraciónQ(Modelos)

Quantity of exported models and accumulated concentration of the exports . %

There are also a concentration in exported models

80

16

66

110

20

40

60

80

100

Cant. Total de destinos Destinos signif.(> 1000 unid.)

2008

2010

The number of destinations to which vehicles are sent in 2010 are hightly concentrated compared with 2008

Export destination

Export Domestic market

Destinations Important destinations (> 1000 units)

MAIN DESTINATION OF EXPORTS OF VEHICLES. 2010. (Units)

8.557

29.361

39.337

19.474

40.813

49.740

42.244

-100%

-50%

0%

50%

100%

150%

200%

0

10.000

20.000

30.000

40.000

50.000

60.000

ene-

09

feb-

09

mar

-09

abr-

09

may

-09

jun-

09

jul-0

9

ago-

09

sep-

09

oct-

09

nov-

09

dic-

09

ene-

10

feb-

10

mar

-10

abr-

10

may

-10

jun-

10

jul-1

0

ago-

10

sep-

10

oct-

10

nov-

10

dic-

10

ene-

11

feb-

11

mar

-11

abr-

11

More than 1.000 units. 2010). Units.

2006 2007 2008 2009 2010

Brasil 112.658 196.467 250.683 285.089 378.865 32,9%

Exportaciones crecientesAlemania 6 747 1.817 676 11.641 1622,0%Uruguay 4.726 5.114 5.723 5.636 9.202 63,3%Venezuela 8.858 19.201 5.931 696 4.983 615,9%Paraguay 1.285 2.142 2.680 1.297 2.585 99,3%Peru 3.729 4.329 1.821 422 1.580 274,4%Vietman 864 1.488 1.788 1.248 1.104 -11,5%

Exportaciones decrecientesMexico 52.680 40.152 39.662 17.482 24.209 38,5%Chile 21.666 16.100 12.959 2.223 4.926 121,6%Colombia 3.104 2.659 1.688 2.502 3.738 49,4%Ecuador 1.405 1.144 620 149 1.354 808,7%

Resto 25.808 26.867 25.720 5.075 3.766 -25,8%

TOTAL 236.789 316.410 351.092 322.495 447.953 38,9%

211,7%

53,1%

Var 2010 vs 2009

Among the countries for which Argentina has been gaining share in recent years, highlights the growth of Germany (almost exclusively by Amarok), Venezuela (who returned to demandvehicles, but not yet solved the problem of access to foreign exchange) Paraguay and Peru.This group grew by 211.7% in 2010 compared to 2009

On the other hand, it also important the growth in Chile and Ecuador in 2010, but in a context where the participation of Argentina as a suppler is in decline in recent years

This is due mainly, to the trade agreements between the Andean countries with East Asian countries.

In the first four months of 2011 exports totaled 142,773 units(+32,4%).

The fall in the graph corresponds to the normal seasonality of the series.

Monthly vehicles exports

FOREIGN TRADE OF THE AUTOMOTIVE INDUSTRY

SOURCE: ABECEB.COM

Foreign trade of the automotive industry. Vehícles and parts. Millons US$

Trade balance of the industry. Vehicles and parts . Millons US$

Imports grew due to strong demand for vehicles, but mainly by thedemand for auto parts

In fact, the sector's trade deficit can be explained solely by the balance in auto parts

370,6 -151,11.272,5 1.018,2

1.730,2

-4.111,8-5.355,4

-3.724,1

-6.817,5-7.840,0

-10.000

-8.000

-6.000

-4.000

-2.000

0

2.000

4.000

2007 2008 2009 2010 2011 e

Vehículos

Autopartes

-2.2

31,3

-543

,8

-419

,7

-2.2

97,8

-5.4

09,5

-2.4

51,7

-5.7

99,3

-6.1

08

2.334,6 2.753,1 2.091,1 3.755,0

7.472,9

6.276,1

9.005,1

10.930

4.566,0 3.296,9 2.510,8

6.052,7

12.882,4

8.727,7

14.804,417.038

-10.000

-5.000

0

5.000

10.000

15.000

20.000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

e

Saldo Expo Impo

-6.309

Balance Expo Impo

-8.000-7.000-6.000-5.000-4.000-3.000-2.000-1.000

0

2000 2004 2006 2009 2010

IMPORT AUTO PARTS IN AUGUST 2010 REACHED THE HISTORICAL  RECORD

Trade balance in parts. Millons US$ In August import of parts recorded the record: U.S. $883.9 MM

Trade balance in auto parts, share of vehicles makers. Millones US$

-1.837,4 -1.297,6

-2.855,8-3.724,1

60,6% 87,0%73,9% 75,8% 64,6%

-6.309

-1.000-800-600-400-200

0200400600800

1.0001.200

2005 2006 2007 2008 2009 2010 2011

Trade balance

Imports

Exports

Realizadas por terminales

Realized by other companiesAnd by vehivle makers indirectly

Realized by vehicle makers

TRADE BALANCE OF AUTO PARTS

millons U$S (exports FOB, Imports CIF)

Exports Imports

U$S mill. FOB U$S mill. CIF

1995 773 2.170 -1.397

1996 895 2.799 -1.904

1997 1.118 3.999 -2.880

1998 1.081 4.007 -2.926

1999 1.240 2.978 -1.738

2000 1.367 3.204 -1.837

2001 1.241 2.416 -1.176

2002 1.144 1.216 -72

2003 1.192 1.752 -561

2004 1.537 2.834 -1.298

2005 1.763 3.676 -1.914

2006 1.936 4.816 -2.879

2007 2.268 6.387 -4.120

2008 2.557 7.928 -5.370

2009 1.928 5.496 -3.568

2010 2.422 8.731 -6.309

Source: abeceb.com and INDEC.

PeríodTrade balance

U$S mill.

RELATIONSHIP BETWEEN IMPORTS AND AUTO PARTSVEHICLE PRODUCTION

Source: AFAC

PRODUCTION OF VEHICLES AND IMPORT OF AUTO PARTS, 1995-2010

0100.000200.000

300.000400.000500.000600.000

700.000800.000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Pro

d -

un

its

0

2.000

4.000

6.000

8.000

10.000

Imp

ort

of

par

ts -

mil

lio

ns

U$S

Production Import of auto parts

AUTO PARTS EXPORTS BY DESTINATION COUNTRY

Parts FOB U$S 2010 Part. % 2009 Var. % 10/09

Brazil 1.576.884.960,5 65,1% 1.234.625.612,6 27,7%

USA 141.173.732,2 5,8% 124.885.598,0 13,0%

Mexico 118.351.965,0 4,9% 80.876.286,7 46,3%

Chile 87.202.941,7 3,6% 64.827.579,1 34,5%

Venezuela 86.392.756,8 3,6% 78.602.156,5 9,9%

Spain 63.628.315,2 2,6% 44.251.157,9 43,8%

Germany 57.435.228,9 2,4% 48.368.096,5 18,7%

Uruguay 53.385.164,3 2,2% 43.733.394,8 22,1%

France 35.393.888,4 1,5% 26.019.599,1 36,0%

Paraguay 31.818.554,6 1,3% 24.110.163,3 32,0%

Colombia 21.228.445,3 0,9% 15.435.997,5 37,5%

Italy 17.309.541,8 0,7% 17.446.617,0 -0,8%

Bolivia 15.334.911,1 0,6% 17.387.663,1 -11,8%

Tchek Republik 14.986.364,3 0,6% 6.131.270,7 144,4%

Peru 14.943.983,4 0,6% 17.743.378,0 -15,8%

Southafrica 14.776.426,6 0,6% 7.529.643,7 96,2%

China 8.018.725,7 0,3% 4.709.624,6 70,3%

Ecuador 5.411.435,0 0,2% 3.536.747,1 53,0%

Canada 5.240.216,1 0,2% 5.016.059,5 4,5%

Belgium 4.809.650,7 0,2% 5.266.953,6 -8,7%

Rest of the world 48.086.291,0 2,0% 57.301.240,3 -16,1%

Total 2.421.813.499 100% 1.927.804.839 25,6%

Source: abeceb.com and INDEC.

AUTOPARTS EXPORTS, by components

Forge and cast0%

Other rubber autoparts

1%Other autoparts

1%

Other metal autopartsl

1%

Other plastics autoparts

3%

Interior Equipment

3%Shock

absorbers, steering and suspensions

5%

Engines5%

Electric pieces7%

Wheels and pneumatics

10%

Body and parts10%

Engine components

13%

Transmissions40%

Source: abeceb.com and INDEC

AUTO PARTS IMPORTS BY COUNTRY OF ORIGIN

Country U$S CIF 2010 Share % Ac share % 2009 Var. % 10/09

Brazil 4.243.339.552 48,6% 48,6% 2.616.585.750 62%

Germany 735.307.123 8,4% 57,0% 354.091.255 108%

China 505.865.351 5,8% 62,8% 264.772.041 91%

USA 446.649.877 5,1% 67,9% 349.793.709 28%

J apan 386.518.547 4,4% 72,4% 298.088.477 30%

France 352.472.503 4,0% 76,4% 241.350.267 46%

Spain 264.355.188 3,0% 79,4% 168.868.483 57%

Thailand 259.065.354 3,0% 82,4% 195.146.757 33%

Italy 202.533.279 2,3% 84,7% 107.062.212 89%

Mexico 126.270.971 1,4% 86,2% 75.018.712 68%

Uruguay 105.389.838 1,2% 87,4% 70.573.048 49%

Korea 70.950.793 0,8% 88,2% 26.472.026 168%

Tchek Republik 64.660.957 0,7% 88,9% 30.406.046 113%

Turkey 61.438.725 0,7% 89,6% 40.344.713 52%

Chile 59.589.686 0,7% 90,3% 43.613.203 37%

United Kingdom 51.621.538 0,6% 90,9% 40.401.230 28%

India 43.963.304 0,5% 91,4% 21.917.684 101%

Poland 42.812.391 0,5% 91,9% 16.439.494 160%

Taiwan 33.608.999 0,4% 92,3% 23.221.392 45%

Canada 31.528.215 0,4% 92,6% 20.900.731 51%

Rest of the world 642.600.604 7,4% 100,0% 490.516.585 31%

Total 8.730.542.795 100,0% 5.495.583.815

Source: abeceb.com and INDEC.

AUTOPARTS IMPORTS, by components

Other metal autoparts

1%

Air conditioner systems,

heating and parts 2%

Otrher autoparts

2%Other plastic

parts3%

Breaks3%

Shock absorbers,

steering and suspentions

4%

Interior equipment

6%

Wheels and pneumatics

7%Engines

11%Body and parts

11%Electric pieces

12%

Engine parts12%

Transmission23%

Source: abeceb.com and INDEC

GROWTH OF IMPORTS OF AUTO PARTS 2010 VS 2009

Source: AFAC, abeceb.com and INDEC

0%20%40%60%80%

100%120%140%160%180%

Air co

nditio

ns sy

ste.

..

Engin

es

Inte

rior e

quipm

ent

Whe

els a

nd p

neum

a...

Forg

e an

d ca

st

Buffe

rs, s

tere

ering

... To

tal

Other

s rub

bers

aut

o...

Tran

smiss

ion

Electri

c sy

stem

s

Brake

s

Other

s plas

tic a

utop

...

Other

s met

als a

utop

...

body

and

par

ts

Other

s

Vehicl

e fa

brica

tion

AUTO PARTS TRADE DEFICIT BY CATEGORY %

Share %

-1,2%

-1,4%

-2,1%

-2,4%

-2,5%

-2,7%

-2,9%

-3,0%

-5,5%

-10,1%

-11,5%

-12,2%

-13,0%

-13,4%

-16,1%

-20% -15% -10% -5% 0%

TransmissionInterior equipmentElectric equipmentEnginesParts of enginesBodys and partsWheels, pneumaticsBrakesBuffers, steerings and suspentionsAir conditioning systems, hesting and partsOther partsPlastic partsForge and castRubber partsMetal parts

EXAMPLES OS INVESTMENT NEEDED AUTO PARTS

Airbags and pyrotechnic pre-tensioning seat belts.Air conditioning compressor."Green" tiresElectronic Componentized (terminals, connectors).Flywheel.Braking system and its componentsAluminum tubes of air conditioning.Command lights.Air conditioningBelts.Shafts.Adjustable steering column and collapsible.Hotkeys winder (micro switches).Precision Forging.ABS Instrument panelClutches

Power steering pump.

Steering box.

Locks.

Set level and submerged fuel pump.

Clutch discs.

Foundry.

Ignition key.

Electric motors.

Brake pads.

Electronic sensors and dusk, rain, back.

Engine injection system (pump,

 injectors, pipes, electronics).

Door lock systems.

Fuel tank cap.

Hubcaps

Tube filled fuel tank (plastic piece blown).

Nylon fuel pipes trilayer

ARGENTINA: SCENARIOS FOR 2011

Proyected variables of the automotive industry in Argentina. Units

Made in Argentina 12% 13% 12% 13%

40% 837.732 856.194 845.076 863.844 38% 822.228 840.690 829.572 848.340 40% 829.572 848.034 836.916 855.684 38% 814.476 832.938 821.820 840.588 40% 821.412 839.874 828.756 847.524 38% 806.724 825.186 814.068 832.836

720000ARG

ENTI

NA

2011

Registrations

760000

740000

3.620.000 3.680.000BRASIL 2011

432,1544,6 597,1

512,9

716,5864,6

950,11.037,51.128,7

0

200

400

600

800

1.000

1.200

2006 2007 2008 2009 2010 2011 (e)

2012 (p)

2013 (p)

2014 (p)

109,7 139,0 179,1 108,8 181,5231,9

322,5405,7

418,0404,1

535,0632,7

0

100

200

300

400

500

600

700

800

900

1.000

2006 2007 2008 2009 2010 2011 (e)

Resto del año

4 meses

Vehicles production in Argentina. Medium term proyections. Units

Vehicles production. Thousands units

Monthly average in

order to reach 864,6

thousands vehicles in 2011

70 mil u

PROYECTION OF THE MAN VARIABLES OF THE AUTOMOTIVE INDUSTRY IN ARGENTINA

2006 2007 2008 2009 2010 2011(p)Production 432.101 544.647 597.086 512.924 716.540 840.600 Sales 460.478 564.926 610.782 514.923 662.591 740.000 National 188.479 234.354 238.465 206.999 250.724 281.200 Imported 271.999 330.572 372.317 307.924 411.867 458.800 Exports 236.789 316.410 351.092 322.495 447.953 550.000 Expo/Prod. 54,8% 58,1% 58,8% 62,9% 62,5% 65,5%Nat./Prod. 43,6% 43,0% 39,9% 40,4% 35,0% 33,5%Nat./Sales 40,9% 41,5% 39,0% 40,2% 37,8% 38,0%

PROYECTIONS

The automotive industry has a medium-term growth perspective.

External demand will keep rising due to growing domestic market in Brazil  and the recovery of other foreign markets (especially Latinamerica) that also have good market prospects. 

At the same time, domestic demand will continue to pull the production as  economic growth will continues to growth up based in the expansion of consumption.

With this perspective, the outlook for domestic production of vehicles in 2011 put the figure at about 864.600 vehicles, with proyections to reach one million units by 2013.

However, growth in production will result in the growth in imports of auto parts (for the original market for the increased production and  the aftermarket by the growth in the vehicle fleet) and therefore a trend towards the increase in the deficit of the trade balance of the industry.

For these reasons the Argentine Government is working to promote investments in order to increase local capacity in manufacturing auto parts.

FINAL COMMENTS

ASOCIACIÓN DE FÁBRICAS ARGENTINAS DE COMPONENTES

Thank you!

June, 2011

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