Industry Trend Analysis - Mercedes Tapping Into Regional LCV Recovery - FEB 2018

BMI View: Mercedes-Benz 's investment will add to the already strong production outlook for LCVs in Argentina . The company will also be well placed to capitalize on the advantages of Argentina ' s LCV production specialization and the growing demand for LCVs in Latin America as demand the region recovers over the next five years.

In April, Mercedes-Benz, a subsidiary of Daimler, announced a USD150mn investment into establishing production of the company's next generation of Sprinter vans at its Argentinean plant. The exact dates for production runs to begin have not been announced but are estimated to be in 2019, following the company's promise to begin production "before the end of the decade".

The new investment is well-timed and placed as it chimes with our already bullish view on light commercial vehicle (LCV) production in the country. We forecast LCV production to grow by an annual average rate of 9.2% over our five year forecast to 2021. Automakers have increasingly seen Argentina as Latin America's strategic production hub for both pick-ups and vans and, as a result, LCV production investments have streamed into the country over the last two years ( see ' Autos Investment Round-Up: Bets On Argentine Export Recovery ' , September 26 2016). Not only will Mercedes-Benz's investment add to this growth but it will also now be better able to draw from a well-specialised and well-equipped supplier base for LCV production and more easily find engineers and employees with appropriate LCV-specific skills.

Mercedes Adding To Investment Wave For LCV
Argentina - LCV Production Forecast, Units
f = BMI forecast. Source: ADEFA, BMI

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