The Colombian automotive sector has experienced a record year of significant growth amounting to 32 percent from 2010-2011. The 5.5 million automotive units currently in the country, ranks Colombia third in Latin America. This is primarily due to the fact that Colombia has access to a market of 34 million vehicles resulting from the country signing several commercial agreements. With this, the country has taken advantage of the ideal location to create a platform for the manufacturing and assembly of cars, buses and auto parts intended to supply the local and regional markets.
Colombia currently ranks 3rd in automobile manufacturing in Latin America. The automotive sector contributes to 6.2% of the country’s GDP and employs about 2.5% of the country’s population. With an estimated population of 44.5 million, Colombia has on average one vehicle per 15 inhabitants.
After a difficult year in 2009, the automotive sector in Colombia has shown positive growth. In 2010 there were 253,869 vehicles sold which will be surpassed in 2011. According to Econometría S.A., September 2011 sales were 22.5% higher than the ones during the same month in 2010. Year-to-date 2011 sales are at 242,399 units, 39.4% more than 2010. This is the highest number of vehicles sold in a month in the history of Colombia. If the country continues with this positive trend, it could surpass 320,000 units sold by the end of the year. This would represent a growth of 20% over 2010 sales. According to Econometria, the increase in 2011 sales are due to the improved average income of the Colombian population, further expansion of the middle class and the acceleration in consumption of durable goods, including the purchase of automobiles.
The automotive market in Colombia is comprised of 43% of the nationally produced vehicles and 57% imported vehicles from South Korea, México, India, Japan, Ecuador, China, and United States. The high import percentage represents good opportunities for all imported parts and accessories, especially for U.S. products which are very well known nationwide.
There are 3 major organizations that produce most of the vehicles in Colombia: General Motors, Renault, and Mazda. In 2010, 43% of the vehicles were nationally produced (110,000 Units of the 253,869 units sold in 2010). General Motors sold the greatest amount of units in 2010 with 67,812 units. Vehicles from General Motors have a very important percentage of imported parts which also represents good opportunities for American companies that sells spare parts for these types of vehicles.
In 2010, the market reached USD 452.2 million representing almost ten percent increase compared to 2009. In 2011, the spare parts market is expected to increase 43%, USD 677.0 million. U.S. imports dominate the market with a 26.7 percent market share, followed by China with a 7.6 percent market share. China is becoming a serious competitor in the automotive parts market competing mainly on price. However, consumers are wary of buying Chinese parts because of their perceived lower quality and durability compared to other vendors.
More than 106 countries compete to supply Colombia’s automotive parts market. The U.S., Brazil, Japan and China have the highest market shares. U.S. and Brazil compete with quality and state-of-the-art products, while the Asian countries have obtained larger market share pursuing a low price strategy and offering correspondingly low quality.
Sub-Sector Best Prospects
Once the FTA between the United States and Colombia enters into effect in May 2012 it will provide advantages for U.S. exporters. Current tariffs range from five to thirty percent which will be significantly reduced with the FTA. Colombia will eliminate its prohibition of remanufactured automotive goods, as defined in Chapter Four – Rules of Origin; most tariffs will be eliminated within 10 years.
The top U.S. exports to Colombia in this sector are:
• Gasoline and diesel engines, piston rings, cast-iron engine parts, carburetors, engine valves, other cast-iron engine parts, fuel-injection pumps
• Electric storage batteries, nickel-cadmium storage batteries, electrical distribution parts, terminals, electrical splices and electrical couplings, boards, panels, consoles
• Cabinets for motor vehicles, bodies for passenger automobiles, body stampings, gearboxes, drive axles with differential, suspension shock absorbers, radiators, clutches, suspension systems, parts for power trains, brake parts
• Shock Absorbers
• Lights, high and low beam and also decorative lights
• Air Filters and Oil Filters
• Gaskets for the engine
• Other cast-iron engine parts
• Tires for small vehicles, trucks and buses
• Parts of fans, ventilating hoods, air conditioning and parts for motor vehicles
• Ball bearings, tapered roller bearings, roller bearings, gaskets and similar joints of metal sheeting.