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Colombia Autos Report 2011
Business Monitor International, Nov 2010, Pages: 41
Colombia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's automotive industry.
Rising consumer optimism and a robust economic recovery in Colombia – with 2010 real GDP growth forecast to hit 2.5% year-on-year (y-o-y), according to the country's central bank estimates – are setting the stage for 2010 to become the second best year on record for sales. BMI currently forecasts Colombian auto sales to reach close to 213,000 units by the end of 2010, marking a significant recovery from the 17% y-o-y fall in vehicle sales, to only 181,065 units, during 2009.
We are cautious, however, that a full recovery to pre-crisis levels may not be possible until 2013 as the conservative nature of the domestic banking sector will hold back a rapid recovery in lending. Moreover, unemployment is still relatively high in Colombia and until we witness a significant improvement in employment figures, consumption in Colombia is likely to remain relatively mild. By the end of our forecast period to 2015, nevertheless, we expect the total vehicle market to reach sales of over 322,600 units, which will make Colombia one of Latin America's prime targets for foreign investment and new entrants into the market.
According to industry figures, General Motors Company (GM) currently leads the market, thanks to the popularity of its core Chevrolet brand. However, Colombia could see an influx of European cars thanks to a free trade agreement (FTA) with the EU. Although the final details are yet to be approved, it has been reported that the FTA will result in a complete removal of import tariffs on industrial goods, primarily cars, from Europe by 2018. This trade arrangement will be particularly beneficial to Renault and Fiat, both looking to bag strong gains in the domestic market. We also expect an increased presence of South Korean brands in the near future.
Meanwhile, the Colombian government is attempting to boost its green credentials by suspending import tariffs on 'green vehicles' – including electric, hybrid and CNG passenger cars, trucks and buses – for the next five years. Although still at a very nascent stage, Colombia unveiled its first domestic EV – the Salamandra Lexion – in April 2009, built by local-based Yakey International.
Despite these developments and more investment coming from existing carmakers, mainly Renault and GM, Colombian autos manufacturing lacks the scale and volume compared with its major regional peers. As such, it ranks sixth in BMI’s Industry Risk-Reward Rating, only performing better than Peru.
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