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Peru Autos Report 2011
Business Monitor International, Nov 2010, Pages: 38
Peru Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's automotive industry.
The impending regulations, free trade agreements with major markets and low vehicle ownership levels are some of the factors that BMI believes are making way for Peru’s becoming one of the most promising auto growth markets for in Latin America, alongside Brazil. A robust 61% year-on-year (y-o-y) increase in vehicle sales, to 64,948 units, in the first seven months of this year – according to the Association of Automotive Representatives of Peru (AAP) estimates – along with a solid economic expansion during H110 have encouraged BMI to forecast record sales of just over 118,600 units in 2010, much higher than the current all-time high of 92,500 units sold in 2008.
Equally encouraging is the fact that the government is looking at ways to curb used-car sales, which will eventually make way for improved new vehicles sales. The government has been long been on a mission to curb the used car market, particularly imported ones. Opportunities also lay in the fact that a substantial proportion of the country's fleet comprises vehicles older than 15 years. Not only is the government looking to modernise the country's entire vehicle fleet, it is also prioritising improvements in road infrastructure for improved competitiveness, productivity and safety. We believe these measures will encourage new passenger car demand. BMI therefore expects sales growth to average nearly 12% y-o-y between 2011 and 2015, taking the market size to over 205,000 units by the end of the forecast period. Estimates from the Araper have shown Toyota Motor as the most popular carmaker in Peru, selling 14,889 units and occupying just under a 23% market share during the first seven months of this year. South Korea’s Hyundai Motor ranked second with a 12.9% market share, while Nissan Motor was moved to the third position with only 9.8% market share during the same period. However, this could soon be changed now that Peru has signed free trade agreements with South Korea, Europe and China.
Unsurprisingly, this will facilitate entry of new firms in the market, which will try to corner the demand at the expense of the dominating Japanese companies. The Japanese carmakers, on the other hand, could draw encouragement from the fact that they collectively hold close to a 40% market share in Peru and that the Japanese government is looking to conclude its negotiations for an FTA with Peru as soon as possible. Peru currently ranks in seventh position of BMI’s Industry Risk-Reward ratings, mostly having lost points due to the fall of its autos manufacturing and the relatively small size of its autos market. Moreover, Peru's infrastructure is in need of more extensive development projects and regular financial injections, with capacity constraints presenting a growing risk to price stability. However, we see prospects of improvement in Peru’s ratings if either of the existing carmakers or new industry entrants commit to local production in the country.
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