Lifan Uruguay will resume exporting the Lifan 320 to Brazil

Lifan’s Model 320 on display at car show in China. Model 320’s are produced in Uruguay for the South American market.

For two years, Brazil has prevented Chinese automaker Lifan, which produces cars in Uruguay for the South American market, from exporting cars into the country. Lifan now has 2,000 vehicles sitting in Uruguay which were produced for sale in Brazil. After receiving special approval from Brazil, Lifan will resume exports with a shipment of 70 model 320 cars in the next few days.

Brazilian authorities solicited a series of documents from Lifan to certify that 35% of the parts in Lifan’s model 320 are Brazilian, a requirement of the special decree signed by Brazilian President Dilma Rousseff that lifted the ban which had blocked Lifan’s imports for the past two years.

Lifan will ship 70 of these cars from Uruguay to Brazil in the next few days. Lifan has not been allowed to ship into Brazil for the past two years.

Pablo Revetria, the head of Lifan Uruguay told the Uruguayan newspaper El Observador that Lifan has until October 29 to move the 320 and 620 model vehicles currently in Uruguay into Brazil.

Asked what Lifan would do if they were unable to export the cars to Brazil, Revetria explained that some cars could be sold on the Uruguayan market and Lifan is “very far along” in Venezuela’s import approval process. “When that process is completed we will be in place to move an important amount of stock”, Revetria said.

This Uruguayan Business Reports news article is a summarized translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay’s executive branch seeks a permanent ban on importing used cars

In the next few days Uruguay’s executive branch intends to send a bill establishing a “definite prohibition” on importing used vehicles to the parliament.

The upcoming bill is the result of analysis by an interministerial commission (led by the Economy Ministry with representatives from the ministries of Industry, Transportation, Public Works, Housing, and the National Road Safety Unit) created to make a final decision on used car imports. There has been a ban on used car imports into Uruguay since 1959 but it has to be extended every few months.

The commission acknowledged that Uruguayan consumers would benefit from used car imports, however it found concerns about security, environmental standards and harmonization within Mercosur (all members have banned used car imports except Paraguay) outweighed those benefits.

The commission was originally scheduled to announce their findings on May 1. The ban’s last extension, which Uruguay’s parliament approved in 2012, is due to expire on the August 30, 2013.

The new law would end the need for further extensions.

The 1959 decree required the ban be re-approved every six months. In 2005, the law was changed to allow the law to be reauthorized for up to four years.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay Auto News: Argentinean trade restrictions put Uruguay’s auto manufacturers in a cage; Domestic sales jumped in May

The Uruguayan Chamber for the Automobile Industry (CIAU) is concerned about the “stagnation” in automobile exports to Argentina. Uruguay has not been able to export trucks to Argentina and is asking “the government to change its strategy”.

According to the president of the CIAU, Ramón Cattaneo, “Argentinean cars enter Uruguay with total freedom but going from [Uruguay] into [Argentina] we are completely barred”

“Argentina is not complying with established agreements”  and it is having a sever impact on the Uruguayan auto industry: “businesses have been weathering the storm as well as they can for six months now” Cattaneo told El País.

The most worrying problem is in truck exports. According to the president of the CIAU “very few trucks are entering through the general process”. Even “more serious” is the preferential free trade process (Uruguay negotiated tariff free entry of Uruguayan trucks into Argentina in exchange for allowing Argentinean cars into Uruguay tariff free) “we still can’t export a single vehicle [through that arrangement]”, Cattaneo said.

Argentinean car exports do not pay a tariff to enter Uruguay. Uruguay is supposed to be able to export 20,000 cars and 800 trucks a year into Argentina tariff free, a number that is far from being used up, according to the CIAU.

Cattaneo said that the CIAU believes “the lesson here is that the government has to change its strategy” and he added that ” the current strategy is not getting results for Uruguay”

Another root cause of the low number of exports to Argentina is that automobile manufacturers feel the need to focus on the Brazilian market. “We are exploring exporting to Brazil, but the logistics question is complicated. Trucking [cars] is expensive and the market is big and competitive”, said the President.

While exports to Brazil have increased, the higher numbers to don’t equal the losses stemming from Argentina’s closed market. Additionally, Brazil has limits on which brands can be imported, some businesses “do not have permission for their vehicles to enter”, said Cattaneo.

The situation has stagnated Uruguayan sales to the rest of the region and as a result 400 employees from various companies have been laid off.

Currently the CIAU is looking to the government to tackle the problem which “has remained unchanged since the beginning of the year and shows no sign of improving”, Cottaneo concluded.

Domestic Sales Jump in May

According to the Uruguayan Automobile Trade Association sales this May increased 2% over May of 2011. Dealers sold 4,607 vehicles this May compared with 4,515 in May 2011.

In the period between January and May sales increased 4% over the same period last year. Between January and May of this year 21,105 vehicles were sold compared to 20,369 in 2011.

The biggest increase this month was in regular auto sales which rose 7%. However between January and May sales only increased 1% over 2011. “Utility” vehicles fell 7% this May but are still up 11% since January.

Truck sales fell 11% in May although they are up 18%  through the first 5 months of the year. May’s decrease can be explained by the Uruguayan government’s decision to freeze the entry of new trucks into the National Registry of Professional Cargo Transporters.

Bus sales fell by 26% in May and are down 69% since January. However, the Uruguayan Automobile Trade Association emphasized that it “is a very volatile market and heavily depends on investments by only a few businesses”.

This Uruguay Business Reports news article is a combination of a translation of a news article by Pablo Rossi which appeared the Uruguayan newspaper El Pais and original reporting on data released by the Uruguayan Automobile Trade Association. The section up to the heading Domestic Sales Jump in May is the translation of the El Pais article, below that is the our original coverage. The original El Pais article is available here. Uruguay Business Reports translation and reporting by Donovan Carberry.