The Argentine government moved on car prices in light of numbers that were fast outstripping inflation. No terms regarding the price cap were ever laid down in writing, supposedly because manufacturers did not wish to have to explain the policy to their parent companies in case this affected future investments in the country. With new models expected to be launched in Argentina in 2007, however, and exchange rates beginning to take their toll, carmakers such as Fiat are anxious to secure government support and understanding for the policies they choose.

BMI is forecasting strong growth for autos imports up to 2010. Argentina has also struck a new flex exchange agreement with Brazil that will not only open up the Brazilian market to Argentinean vehicles, but also increase the number of Brazilian autos entering the country. Should our predictions be borne out, and Brazilian exports continue to weigh so significantly on the Argentine market, the government's stance is likely to dampen any aspirations carmakers may have to invest further in the country, particularly if they are not seeing an appropriate return.

Overall, Argentina's automotive industry remains in robust form, with industry majors reporting healthy sales figures for the month of September. The Volkswagen group, for example, sold 8,020 units, in line with data from the Argentinean carmakers' association ADEFA. General Motors, meanwhile, sold 6,923 units, while Ford sold some 5,417 units and Italy's Fiat shifted 3,959 units. The industry's productive arm is also performing well. According to ADEFA 44,271 vehicles were made in September, one of the highest figures achieved for the month in the last 15 years. Investment plans earmarked by the likes of General Motors and Toyota to boost production in Argentina show that at least in the medium term carmakers are not likely to be deterred by government controls.