The government of Mauricio Macri will analyze the impacts of the lowered taxes after six months and modify them as needed, Production Minister Francisco Cabrera said.

A tax on cars that cost more than 350,000 pesos (USD 27,000) will fall to 10 percent from 30 percent while a tax on luxury vehicles that cost more than 800,000 pesos will fall to 20 from 50 percent, Cabrera said.

"We're eliminating red tape and distortions that limited investments with a focus on generating more and better jobs," Cabrera told reporters. "There's confidence in the country's productive capability that is waking up."

Cabrera said that he expects some USD 3.8 billion in investments in local auto-making through 2017.

Argentina's car industry has struggled in recent years due to a stagnant domestic economy and a regional slowdown, particularly in main trading partner Brazil.

Auto production in Argentina dropped 16.6 percent on the year in November, with exports plunging 52.4 percent, according to the ADEFA association of vehicle makers.

The president of ADEFA, Enrique Alemany, praised the government's decision and said the tax cuts would result in more car models and jobs.