In the automotive market there are 15 brands and 89 new models

Posted On 13 Feb 2019

Ecuadornews:

The Association of Automotive Companies of Ecuador reported a 31% growth in the sale of new vehicles. Only with the agreement with the European Union entered 20 models. Chinese cars also win customers.

For the second year in a row, the automotive sector registered growth in sales. 2018 concluded with 137,615 new units sold, that is, 31% more than in 2017. According to figures from the Association of Automotive Companies of Ecuador (Aeade), the sale of vehicles of Chinese origin shows a significant increase.

From 2016 to 2018 these sales increased 8.30%. Genaro Baldeón, president of Aedae, said that the growth of Chinese cars is due to the expansion of that country worldwide. “China is the world’s leading vehicle factory, which has allowed it to gain competitiveness. Add the reduction of production costs and prices, in addition to technology and innovation in cars, “said Baldeón.

He stressed that the country competes several Chinese brands, which means greater supply for the consumer. The trade agreement between Ecuador and the European Union also influenced the growth of the participation of that origin.

Sales increased from 1,519 units to 8,810, an increase of 4%. This agreement allowed the entry of two new brands and more than 20 models between 2017 and 2018. In general last year for the automotive sector was a recovery period, thanks to a demand repressed in previous years. In addition, factors such as the economic conditions of the country, a policy of greater openness and the support of financial institutions through the delivery of credits, influenced the growth of the sector.

The demand for vehicles increased

The supply of cars also increased. Last year, 15 new brands and 89 models entered. On the other hand, light vehicles had a price reduction of approximately 8% between 2016 and 2018. In that time period, a car went down from $ 23,900 to $ 16,490.

While a van was reduced from $ 58,990 to $ 51,990. Regarding sales of work vehicles, the segment that grew the most last year was the vans, with 53.8% more than 2017. It was followed by the truck segment, which reflects a growth of 37.1% and finally that of the buses that closed 2018 with an increase of 2.9%.

According to Baldeón, the recovery of the automotive sector allowed the growth of at least 12%. According to figures from the Ecuadorian Institute of Social Security (IESS), between 2015 and 2017, about 3,300 new workers were affiliated in the companies producing, marketing and maintaining vehicles.

The growth of the sector left $ 1,451 million in taxes to the State, that is, $ 556 million more than in 2016. However, by 2019, the prospects are not the best. Aeade foresees a decrease of at least 9% in the demand for vehicles.

Baldeón, referring to the figures managed by the World Bank (WB), the International Monetary Fund (IMF) and the Economic Commission for Latin America (ECLAC), pointed out that the country’s economy will grow only 1%, which may slow down economic growth. On the other hand, the demand for cars that was dammed was already addressed in the two previous years, so no further increase is expected. To this should be added the fact of a possible deceleration of the placement of credits. Challenges for the sector The Ecuadorian government took the decision in recent months to make adjustments to the fuel subsidy as a measure to optimize public spending, something that is supported by Aeade.

According to Genaro Baldeón, when the State assumes the subsidy amount, a barrier is created to improve the quality of fuels. “The permanence of the subsidies forces us to consume fuel harmful to health and the environment, especially in diesel and extra, which have high levels of sulfur particles,” he said.

He also emphasized that the quality of gasolines that are marketed in the country, prevents the introduction of cars with new efficient technologies to the market. In that sense, he criticized the Government’s decision to eliminate the incentives for the import of hybrid vehicles in the Law of Productive Development.

In the regulations, the Executive proposed that this type of automotive pay the Value Added Tax (VAT), which were exempt. The growing share of hybrid vehicles with sales exceeding 300 units per month registered a drop in September, when only 75 units were sold. “It is regrettable the decision taken by the Government regarding electric vehicles, because the provisions of the Law did not allow the introduction of cars with electrical technologies,” said Baldeón.

He also said that the participation of this type of cars in the Ecuadorian market is still small, since it represents only 1%, a trend that is worldwide. Autos assembled in Ecuador continue to lose market Contrary to the sale of imported cars, vehicles assembled in the country lost 23.10% market share.

This aggressive competition with imported cars is a phenomenon that has been observed since the beginning of last year. To support the sector, the Government made effective the application of a reverse tariff table, based on the incorporation of local content in the assembly of cars.

The car trade grows in Colombia and in Brazil

During November of 2018 the automotive market of America Latina reported a 2.6% decrease compared to the same month in 2017, according to the latest regional report available from the Aeade.

However, in the period between January and November of the previous year, sales showed an increase of 4.1% compared to the same period of 2017. In the 11th month of 2018, Colombia and Brazil reported the highest growth in sales, 24.4% and 13.1% respectively; while Venezuela and Argentina recorded the greatest decreases in sales with percentages reaching 47.7% and 45.9%.

Within the light vehicle segment, Colombia and Brazil had the largest acquisitions (25.5% and 12.2%); not so Venezuela and Argentina that showed the biggest decreases (46.5% and 45.4%). Regarding the heavy vehicle segment, Brazil and Colombia presented high increases in their commercialization (39.3% and 8.8%); opposite to the case of Venezuela and Argentina, which went through steeper declines (72.7% and 55.6%). The economic situation of these countries is reflected in the vehicle trade. (I)