Normally a nation as economically challenged as Argentina would find its consumers keeping their wallets closed. But instead, rampant inflation is leaving people with no choice but to buy brand new cars.
Never mind that most cars are the antithesis of an investment—since they almost unequivocally depreciate over time—auto sales have soared since the start of the year, and in April alone jumped 30% from last year.
Auto sales have been almost perfectly correlated with the blue dollar exchange rate in Argentina. Data: Bloomberg, Ambito.com
If cars make for terrible investments, why are Argentines racing to move their money from secret bank accounts to brand new BMWs? Because, as long as you’re sitting on enough US dollars to buy an imported car these days, you can get them at a pretty hefty discount. Cars in the country are imported at the official rate, and then sold at the blue dollar rate—as dollars get more expensive in the country, imported cars get cheaper.
Luxury car sales in particular have picked up at an alarming rate; BMW has sold over 1,500 cars in Argentina since the beginning of the year, more than double the amount they sold over the same period last year.
Former Economy Minister Jorge Remes Lenicov told Bloomberg that despite the irony of it all, it actually involves some rational thinking,”The reasoning is you lose money almost anywhere because of inflation, so if you buy a car, at least you get to enjoy it.”
In the absence of a reliable financial system, Argentines are stashing away their blue dollar fortunes in hot red coupes.
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