Automotive Parts and Accessories
A Top Export Prospect for Colombia

(The above statistics are unofficial estimates and are focused on parts and accessories listed below)
Sources:
2011 data is estimated to Dec 31
2012 market data is projected with an increment of 6% per year from 2011
Econometria: www.econometria.com.co
National Statistics Department-Dane: www.dane.gov.co

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Overview

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 Econometria 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.

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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:

There are three current local assemblers (GM-Colmotores, CCA-Mazda, and Sofasa-Renault). With an estimated population of 45.5 million, Colombia has on average one vehicle per 15 inhabitants. The country is the third largest automobile assembler in Latin America after Brazil and Mexico. The average age of motor vehicles in circulation is 15 years, a factor that makes Colombia an excellent market for spare parts for older cars. Another factor that is driving the demand is the frequent need to replace broken parts.

Although the road infrastructure in Colombia is improving, nationwide they are in poor to fair condition, increasing the likelihood of damage to vehicles and requiring constant vehicle safety checks.

Best sales opportunities over the short and medium term will be determined primarily by the continued demand of the aftermarket and by the demand for parts generated by the equipment already in operation. According to industry and trade sources, local companies plan to manufacture those automotive parts and accessories that will have the largest demand in the local market. Demand for imported equipment will follow the same trend, but the growth brought on by expanded markets created by international trade agreements (such as the CAN-Mercosur, G-2, ALADI, and others) could mean more opportunities for U.S. imports.

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Opportunities

The Colombian end-users of automotive parts and accessories are numerous, varied, and difficult to quantify because of the many brands traditionally found in the local market and the number of motor vehicles imported during the period of 1997-2011.

Eighty-three percent of total Colombian vehicles are for private use, fifteen percent are in public service and three percent are for official use (not including those owned by the Ministry of Transportation, the Ministry of Defense, and the Ministry of Foreign Relations).

Approximately 49 brands and some 249 models are found in the market. The following motor vehicle brands competed very actively in the Colombian import market: Chevrolet, Hyundai, Ford, Nissan, Skoda, Mitsubishi, Volkswagen, Kia, Toyota, Peugeot, Renault, Daihatsu, Honda, Citroen, Dacia, International, BMW, Mercedes-Benz, Dina, Renault, Kenworth, Mack, Dodge, Freightliner, Peterbilt, Audi, Agrale, Daihatsu, Samsung, Subaru, Nissan, Isuzu, Hino and Volvo.

Buses are the main form of intercity and inter-state transportation. Cargo transport by road is very active due to the chronically deficient railroad system. Statistics from the Ministry of Transportation indicate that nearly 90 percent of Colombian cargo moving between seaports and the main cities is transported by truck. The long distances and poor roads mean high operational costs, which translate into constant demand for truck parts and accessories. Most of the larger passenger and freight transportation companies maintain good repair facilities for their own vehicles and are strong prospective customers.

Seven other small assembly plants established in 1993 and 1994 produce bus and small trucks bodies and truck chassis. Among them is the new consortium formed by GM (Colombia), Mercedes-Benz, and Volvo (Germany-Brazil) that assembles the “Transmilenio” public buses. Carrocerias El Sol of Bogota assembles double-decker buses for intercity transportation and tourism tours, and medical units that can be used for mobile outpatient care. The company imports axles from Rockwell, Cummins engines, and Allison transmissions and automatic gearboxes from the United States for assembling these vehicles.

Other end-users are as follows:

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Resources

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