December 6, 2008 / 3:26 PM / 11 years ago

Argentine automakers to sell at cost, protect jobs

BUENOS AIRES, Dec 6 (Reuters) - Argentine automakers will sell basic models at cost through state-subsidized loans in a plan to protect jobs in Latin America’s third-biggest economy from the global economic slowdown, government officials said on Saturday.

Local plants of Renault SA (RENA.PA), General Motors (GM.N), Peugeot (PEUP.PA), Ford Motor Co. (F.N) and other automakers will participate in the government’s plan to protect 150,000 auto industry jobs and to keep production from falling steeply next year.

“We have agreed with the plants that these cars will be offered without a profit margin and the dealerships will also reduce their profit margin,” Industry Secretary Fernando Fraguio told a news conference on Saturday.

The $890 million government auto loans program is part of a $3.8 billion economic stimulus package announced on Thursday by President Cristina Fernandez.

Each automaker will offer two of its most economic models for the plan, while the government will provide three different financing packages with interest rates much lower than market rates, to be funded by the social security system.

Argentina’s vehicle output is seen at 600,000 to 610,000 units this year, up 12 percent from last year.

Officials said some 150,000 people are employed in the sector, including auto parts and auto sales.

Argentina’s auto manufacturing, which accounts for 36 percent of the country’s industrial exports, has been one of the first to feel the pinch as the economy slows, and executives forecast a 15 percent reduction in output next year which is what the government plan aims to avoid.

Reporting by Fiona Ortiz; Editing by Eric Beech

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