Utilitarian vehicles for business in Buenos Aires:
Additional expenses you need to consider
Photo Credit: Sam Wheeler
When it comes to entrepreneurship and startups, Buenos Aires has the right people: self-confident, resourceful, born and raised to overcome crisis and problems. Even in an economically challenging situation, over 15% of the population is willing to engage in some sort of personal business or investment. The weak local currency has made it very difficult for entrepreneurs to acquire the capital goods they need to perform their activities, so funding is one of the first challenges a local startup has to face. Business vehicles are an expensive capital expense, and out of the reach of many; however, as stated, the Argentinean people are resourceful and inventive, and often manage to overcome these difficulties and kickstart their activities.
Financing expenses in an inflationary economy
Vehicles aren’t very affordable in Buenos Aires. Numbers change constantly because of inflation and devaluation, which brings an added layer of uncertainty to any business prospect. Even if we ignore this key aspect of Argentinean economy, as of the beginning of 2019 a utilitarian vehicle is priced around 500,000 to 1,000,000 Argentinean pesos, while the average full-time monthly salary ranges from 20,000 to 30,000 pesos. For this reason, vehicle financing is often the only way to buy an utilitarian vehicle, and interest rates tend to be quite high in order to compensate for the inflation. It’s not rare for a local entrepreneur to spend a couple years paying the instalments of a business loan, which will absorb a potentially substantial cut of the monthly income.
Insurance and coverage compliance on your UTV
Argentinean law requires that all vehicles are properly insured, regardless of their intended use. However, there are additional insurance expenses associated with the presence of employees driving, or traveling in, a business vehicle. Argentinan businesses, including startups, all must hire a third-party insurance provider called ART (Aseguradora de Riesgos de Trabajo, or working risk insurance provider) to provide coverage to all personnel, especially those that are exposed to accidents. Traffic in Buenos Aires, as in any other large city, can be intense and dangerous for many reasons. All employees that drive or use a vehicle during working hours must be covered, and the premium will increase the more employees you need to cover and the riskier the activities are.
You can save on some of these expenses by driving the UTV yourself, since as an employer you don’t have the obligation to hire an ART for yourself; but in some cases, your role in the company is just incompatible with driving the utilitarian, so you need to keep the insurance costs in mind, and deduce them from the business’s income.
Plan ahead your expenses from your utilitarian vehicle
It might seem challenging to “plan ahead” in an inflationary and unpredictable economy, but people in Buenos Aires are more than used to this shaky battlefield. They manage to overcome setbacks and adapt once and again, which makes the city into a very refreshing and hopeful business scenario. Utilitarian vehicles can be costly to buy with local currency, but there are always options to work around it, and triumph in the ever-flourishing market of the capital city of Argentina.