- Since 2003 Argentina has experienced an almost continuous rise in vehicle registrations (apart from the decline in 2009, which affected all markets). The passenger car market increased from 110 000 in 2003 to 730 000 PC in 2013.

- However, the characteristics of the market did not meet the expectations of the Argentine government. Indeed, in 2013, nearly 63% of registered vehicles were produced outside of Argentina. In the government’s point of view, local production failed to take advantage of the growing market.

- To promote local production, at the beginning of 2014, the government introduced  a new 30% tax on vehicles whose retail price was greater than 170 000 pesos (15 000 Euros) and a tax of 50% for those sold above 18 000 Euros.

- This new tax has had two effects:

1.An artificial market growth at the end of 2013. Buyers bought vehicles before the end of the year (well before their re-purchase date) and took advantage of the good exchange rate between the dollar and the peso. In fact at the introduction of this tax, the value of the purchased vehicle was calculated on the basis of 1 dollar for 6.20 pesos while on the black market 1 dollar was worth 10 pesos. For the Argentine buyer, buying an expensive vehicle while benefiting from the exchange rate was a good deal.

2.For the Argentine government this measure had a real boomerang effect, indeed we can observe a noticeable decrease in the market since early 2014 : -6% in February and -32% in March? -33% in April and -38% in May. Over five months, the decrease exceeded 12%.

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