The market for new automobiles showed some recovery in 2011, after a significant decline in the last previous years. Approximately 40,000 new cars were sold in 2011, down from a record-setting 41,000 in 2008. As a result, demand for automotive parts and service equipment has increased. The automotive inventory in Panama is estimated at 650,000 units. U.S. participation in the automotive parts and service market is significant, with a market share of more than 40%. The main competitors are Japan, Korea, and Taiwan. However, the U.S. market position will improve as sales of U.S. cars increase. Demand will also remain strong for U.S.-made car parts and accessories for Japanese models. Import duties for automotive parts are 10-15% over CIF (customs, insurance, and freight) value. There are no import restrictions on these products. Sub-sectors offering the best market opportunities are servicing equipment, tubes and tires, and engine parts.
NB: in July 2010 the Government of Panama changed the import duty structure for imported cars, by lowering import duties but then applying a sales tax of approximately 20% for both new and used cars. However, these changes have not had much of an impact on the importation of new car or automotive parts.
Sub-Sector Best Prospects
Good prospects for U.S. exports include engine parts, pumps, filters, batteries, ignition parts, spark plugs, lamps, body parts, brake parts, shock absorbers, tires, exhaust components, and used or remanufactured parts especially for buses, dump trucks, and other commercial vehicles.
The expansion of the Panama Canal, a $5.25 billion project, will bring excellent opportunities for U.S. exporters of auto and truck parts. In addition, the Government of Panama started in early 2011 to replace the entire bus fleet serving Panama City. Since the new bus system will replace over 1,500 poorly maintained buses currently on the road, we expect a step order increase in maintenance and parts demands. In addition, the Government has imposed new regulations on the taxi service, which may lead to an increase in demand for maintenance as well.