British maker of autoparts closes Argentine business

British maker of autoparts closes Argentine business

A British maker of auto parts is closing its plant in Victoria in the province of Buenos Aires on the northern outskirts of the country’s capital due to the “serious economic situation” the South American nation is going through, it was reported. The sector is particularly affected by foreign exchange restrictions which render inputs unattainable.

According to Buenos Aires daily newspaper Ámbito, TI Fluid Systems, a British auto parts company supplying to major car manufacturers in Argentina, the company sent a letter to its customers explaining: “Considering the serious economic situation we are going through, TI Fluid Systems has taken the difficult decision to close our facilities.”

Production will stop permanently on Feb. 28, with the company’s final shutdown scheduled for Sunday, April 30. The company manufactures parts for Volkswagen, Renault, Chevrolet, Ford, Peugeot, and Citroën.

“Over the course of the next few months, we will communicate with all our suppliers to discuss a transition/exit plan with each of you,” the letter Ámbito published also noted.

Central Bank hindrances to payments abroad to avoid the outflow of dollars do not come at no cost. In April last year, the Association of Car Manufacturers (Adefa), the Association of Component Manufacturers (Afac), and the sector’s labor union Smata sent a letter to the Central Bank to address this situation, but to no avail.

Products imported under automatic licenses -which grew considerably over the past few months since approvals only took a few hours- have been restricted in their ability to obtain US dollars within the banking system and the companies involved were forced to strain their financing abilities for 180 days to stay in business.

The auto parts sector showed a US$8.766 billion deficit between January and December last year, a 28 % yoy increase, according to Afac’s latest annual report. It was the highest negative balance in the last 20 years.

In 2022, US$ 1.522 billion worth of auto parts were exported (up 11.6 % compared to 2021). The main buyers were Brazil, the European Union, Thailand, China, and the United States.