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back to index backLATINtalk June,  2004


Growing Opportunities in Colombia’s Automotive Market

Last year, Colombia was the fifth-largest U.S. export market for vehicles and second-largest U.S. automotive parts market.

For U.S. firms looking to increase their sales in this sector, Colombia offers opportunities due to its heavy concentration of automotive assembling and strategic location as a hub for entering Latin America.

Norcia Ward, Commercial Assistant, U.S. Embassy, Bogotá, Colombia, is part of the U.S. Commercial Service of the U.S. Department of Commerce’s International Trade Administration (ITA) and its worldwide export assistance network. In the Q&A below, she discusses the latest automotive sector trends and opportunities in Colombia.

Q: What kind of growth has Colombia’s automotive sector experienced in recent years?


Ward: Colombia is a major player in the regional automotive market, and currently ranks as the third-largest automobile assembler in South America (after Brazil and Argentina). In addition, after Brazil, Colombia is the second-largest motorcycle producer in the region, with an annual output of 662,000 units.

However, last year, the Colombian automotive sector experienced a decrease in vehicles sales of 10% from 2015, mainly caused by a drop in global oil prices and a weaker Colombian peso. This resulted in U.S. imports being more expensive for Colombian consumers. By contrast, 2014 had been the best year for automotive sales in recent years in Colombia.

Q: What is the economic impact of automotive manufacturing in Colombia?

Ward: Colombia’s automotive industry includes assembly of light vehicles and trucks, buses and motorcycles, and manufacturing of parts used in assembly for the Original Equipment Manufacturer (OEM) and replacement markets. Together with repair services, the industry contributes four percent of the country’s gross domestic product and accounts for nearly 22,000 local jobs.

The country has eight assembly companies, of which four are relatively large: GM Colmotores, Sofasa, Hino Motors Manufacturing, and Foton. These four companies account for a combined 96% of the country’s vehicle production.

The top-selling brand in Colombia is Chevrolet; in 2016 it sold 60,087 units and had a 24% market share. Chevrolet has held the number one position in Colombia for 30 consecutive years.

Q: What market opportunities exist for sales of U.S. vehicles in Colombia?

Ward: Overall, more than one-third of Colombia’s automotive industry consists of domestic production (CKD) while 63% is imported (CBU), mainly from South Korea, Mexico, India, Japan, China, and the United States.

Electric vehicles offer opportunities for U.S. exporters, especially in the public transportation arena. Such vehicles would have to have the requisite power to climb steep hills at elevation with a full passenger load.

Public transport systems are also being upgraded in the principal cities of Bogotá, Barranquilla, Bucaramanga, Cartagena, Cali, and Pereira, among others. Cities will increase the purchase of new vehicles and automotive parts to modernize and retrofit the old fleet.

The city of Bogotá launched the “Plan de Ascenso Tecnológico” (Technological Improvement Plan), a technology improvement plan for zero or low carbon emissions in the mass transportation sector for Bogotá, also known as the Transmilenio Bus Rapid Transit. The plan contemplates replacing the current fleet with low-emission buses.

Q: What market opportunities exist for U.S. automotive parts suppliers?

Ward: Local production of vehicles has been decreasing in the past few years. However, the high percentage of imports represents a good opportunity for imported parts and accessories, especially those from the United States, which are very well known and regarded nationwide.

Proximity is definitely an advantage for U.S. firms, and while the waiting times to receive the product is less, freight costs are sometimes still expensive. Colombia total automotive parts imports in 2016 were $3.9 billion, from which 21% ($772 million) came from the United States.

Colombia’s local production of automotive parts mainly supplies OEMs with automotive and replacement parts, and while there are opportunities for U.S. companies to supply OEMs, the best prospects for U.S. suppliers is the aftermarket sector and selling to tier-one, tier-two, and tier-three suppliers.

Although infrastructure in Colombia is improving, roads are generally in poor condition, increasing the likelihood of damage to vehicles and the need for replacement parts. The average age of freight and passenger vehicles is 16.9 and 16.7 years, respectively, which increases the need for replacement parts.     

Opportunities for U.S. parts suppliers include radiators, clutches, suspension systems, brake parts, engines, shock absorbers, gaskets for engines, windshield glass, diagnostic equipment, high- and low-beam lights, air and oil filters, air conditioning, ventilating hoods, fan parts, and more. Fortunately, channels and trade shows exist to help U.S. firms connect with buyers and distributors, such as the annual Expopartes exposition and the June 8-9 trade mission organized by the Auto Care Association to Bogotá in close coordination with the International Trade Administration.

To read entire article, please click here

Source: IndustryWeek - GAI




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