July 24, 2014
More companies reject lowering car prices
Workers at vehicle factories will continue to face the woes of the sector as Iveco announced yesterday it will extend its suspensions scheme until June 16 and also offer voluntary retirements. At the same time, head of General Motors Isela Constantini said vehicle prices cannot be lowered, as the federal government asked car makers this week, and said to be waiting for the government to implement measures to solve the crisis.
“Suspensions will continue until June 16. Every week we do an analysis of the company’s production,” press secretary of SMATA vehicle workers union Leonardo Almada said yesterday. “The company offered voluntary retirements and the people who choose to take them will receive economic benefits.”
The extended suspensions in Iveco comes after the company had suspended 500 workers in May. As many as 16,000 workers have been temporarily suspended over the last month in the vehicle sector, according to the SMATA union. Lower sales in the domestic market and fewer exports to Brazil are the two main reasons behind the crisis of the vehicle sector.
Vehicle production dropped 36 percent in May compared to the same month last year, and decreased 13.9 percent compared to April, according to the ADEFA chamber of car manufacturers. A total 50,938 units were manufactured in April, 30,130 of which were exported (39.2 percent less than the same month last year). The ACARA chamber of auto dealerships also reported a 40 percent drop in retail sales last month.
“Every agreement the government makes will be welcomed since it will mean there will be more employment. We are hopeful a deal is signed with Brazil because it will lead to more sales and work for our fellow workers,” Almada said. “We have seen suspensions in Fiat, Iveco, Volkswagen and in auto-parts factories. No suspensions have been reported in Renault.”
‘Prices cannot be lowered’
At the same time, the head of General Motors Isela Constantini said yesterday “prices of vehicles cannot be lowered” and asked the government to “evaluate the tools available” to reactivate the vehicle sector.
“We want to sell more cars and we don’t want to have to suspend workers. But we also don’t want to lose more money than what we have already lost. Each factory has to evaluate its situation,” Constantini said. “ We cannot reduce our prices on the domestic market. I don’t know how we are going to solve this problem. We sent the government a proposal so we are waiting to see what they do”
The government reportedly agreed this week to sign a one-year deal with Brazil to regulate vehicle trade between both countries. The agreement will be signed next week in Buenos Aires and implies that for every dollar Brazil imports from Argentina in the auto sector, it will export between US$1.6 and US$1.7. The agreement is more attractive for Argentina compared to the previous pact, which forced the government to import US$1.95 per dollar exported to Brazil.
“There are tools to implement. The government has to evaluate which ones it wants to use and how to apply them. A finance plan was mentioned, that’s what they talked with us. There are many expectations,” Constantini said. “There’s a lot of rumours about what’s going to happen with prices and taxes and that’s what makes vehicles demand drop.”
The federal government held a meeting with car makers earlier this week and asked them to lower prices by up to 10 percent, which would be compensated with additional funding mechanisms to reactivate sales on the domestic market. Economy Minister Axel Kicillof and Industry Minister Débora Giorgi also rejected a proposal to amend the tax on high-end vehicles since they considered it only affects a small share of the market.
Herald with DyN