As part of the trend of multinationals leaving Argentina, the speculation that Mercedes Benz may be the next to exit the country is gaining traction within the automotive sector. In response to this speculation, local stakeholders have initiated discussions aimed at preserving the assets of the German automaker, with President Milei’s father playing a prominent role among them.
It is known in the industry that both Nicky Caputo’s Mirgor Group and Ruben Cherñajovsky’s Newsan have shown interest. These businessmen are direct beneficiaries of the industrial promotion regime in Tierra del Fuego, which provides a variety of tax and customs benefits for operations conducted in the region, a system that both Milei and his minister, Federico Sturzenegger, mysteriously refuse to amend.
The state is missing out on billions of dollars in potential revenue due to this regime, which, in return, offers the advantage of generating quality jobs in a remote area like the southern island.
The competitive advantage of Caputo and Cherñajovsky is undeniable. Their electronic firms already supply the automotive industry. Through vertical integration among companies, along with the island’s tax benefits, production costs could be significantly lowered.
However, the real surprise comes from a third player, introducing more complexities. This is the Dota group, which owns the largest number of bus lines in the AMBA and has close ties to Norberto Milei, the President’s father.
Norberto Milei transitioned from bus driver to businessman, having presided over Rocaraza SA, Lieutenant General Roca SA, and Francisco de Viedma SA at least between 2004 and 2005.
“With Ricardo Jaime’s appointment to the Ministry of Transportation, Norberto Milei chose to merge his three companies with brothers Andrés and Luis Faijá, who were the titans of urban transportation in Argentina at that time,” said a former head of the Transportation portfolio to LPO.
Transport industry insiders are aware of the DOTA group’s connections to the president’s father. “The decisive actions he advocated during the campaign while Massa was minister are noteworthy, especially since he not only didn’t support the transport strike against the Milei government but also threatened drivers to discourage them from participating in the strike,” commented a UTA leader.
Milei had a strained relationship with his father until he began gaining political prominence. During the pandemic, there was a family reconciliation, and the Milei siblings and their parents began living together in the luxurious tower owned by the bus businessman in Vicente López. Following his presidential election, it became increasingly common to see Milei’s parents at official events, such as during the recent Budget presentation in Congress.
Impending Departure of Mercedes Benz from Argentina: Stakeholders and Implications
The Current Automotive Landscape in Argentina
As multinational corporations continue to flee Argentina, speculation mounts within the automotive sector about Mercedes Benz possibly following suit. The ramifications of such a departure could be significant not only for the local industry but also for the economy at large.
Stakeholders Interested in Mercedes Benz Assets
Amidst the apprehensions regarding Mercedes Benz’s future in Argentina, local business figures have initiated dialogues aimed at retaining the automaker’s assets. Of particular note is Norberto Milei, President Javier Milei’s father, who has become a key player in these discussions.
Local businessmen like Nicky Caputo and Rubén Cherñajovsky are also showing interest. Both are influential figures in the automotive sector and stand to benefit greatly from the country’s industrial promotion regime, especially in Tierra del Fuego. This regime offers enticing tax and customs benefits which are critical for maintaining and growing local automotive production.
The Impact of the Industrial Promotion Regime
The industrial promotion regime in Tierra del Fuego leads to billions in missed state revenue but provides significant advantages, including:
- Creation of quality employment opportunities in remote areas.
- Encouragement of local manufacturing and supply chains.
- Reduction in production costs through tax incentives.
Comparative Advantages in the Automotive Sector
What sets Caputo and Cherñajovsky apart is their already established electronic companies, which supply the automotive industry. Their vertical integration of operations, coupled with the financial benefits from the Tierra del Fuego regime, positions them favorably for potential negotiations regarding Mercedes Benz’s assets.
The Role of the DOTA Group
However, the emergence of the DOTA Group introduces another layer of complexity. As the largest operator of bus lines in the AMBA region with strong ties to Norberto Milei, the DOTA Group could become a significant contender to acquire Mercedes Benz Argentina.
Background of the DOTA Group
Norberto Milei transitioned from a bus driver to a businessman and once presided over several transportation companies. His connections and influence in the transportation sector could facilitate a successful bid to acquire Mercedes Benz.
The Political Context Surrounding the Automotive Industry
Norberto Milei’s political influence is noteworthy. During the campaign, he took strong positions that were markedly different from those of other leaders, including former minister Massa. Surprisingly, during a recent drivers’ strike against the Milei administration, he demonstrated his authority by discouraging participation among drivers.
Family Dynamics and Political Alliances
Historically, Javier Milei had a strained relationship with his family, particularly his father, but there has been a recent reconciliation. The Milei family now attends official events together, indicating a unified front amidst the political turbulence.
Potential Outcomes and Future Projections
The discussions surrounding the potential acquisition of Mercedes Benz by local players underscore the broader challenges facing the Argentinian automotive industry. Questions remain regarding the sustainability of current operations and how the government will navigate its fiscal responsibilities amidst growing corporate interests.
What Lies Ahead for Local Automotive Stakeholders?
For stakeholders, the next steps remain critical. The following dynamics could play out:
- Negotiations: Continued negotiations among local players could lead to a strategic acquisition that retains manufacturing capabilities.
- Regulatory Changes: Potential reforms to the industrial promotion regime may alter the competitive landscape.
- Job Security: The fate of thousands of jobs in the automotive sector remains uncertain as stakeholders weigh their options.
Case Studies of Multinational Exits in Argentina
Examining other cases of multinational corporations exiting Argentina provides context. Several companies, faced with economic uncertainty and unfavorable regulations, chose to withdraw, impacting local employment and production capabilities. These instances serve as cautionary tales for both local businesses and policymakers.
First-Hand Experiences: Employees and Local Suppliers
To understand the true impact of potential exits, consider the perspectives of employees and local suppliers. Their experiences shed light on the ripple effects of corporate decisions in the automotive sector:
- Employees: Many workers express uncertainty about job stability amidst rumors of corporate exits.
- Local Suppliers: Suppliers share concerns about losing contracts and revenues if leading companies pull out.
Conclusion: Navigating an Uncertain Future
As Argentina’s automotive landscape continues to change, the fate of Mercedes Benz and the interests of local stakeholders such as the DOTA Group, Caputo, and Cherñajovsky remain fluid. The interplay between corporate strategy and governmental policy will determine the survival of this vital sector in the Argentinian economy.