Local automotive industry continues to lose market

Ecuadornews:

Vehicle assemblers and manufacturers of automotive parts request a meeting with the Minister of Economy to present their situation. They question the management of the Foreign Trade Committee.

The participation in the market of assembled vehicles in the country went from 55.7% in January 2015 to 34.6% in the same month of 2018, that is, a reduction of more than 21 percentage points, which demonstrates the crisis that faces the sector.

Between January and April 2017, 53% of vehicles sold were imported and 46.9% were assembled in the country. But in the same period of 2018, the commercialization of imported cars reached 68.1% and of assemblies fell to 31.9%.

For David Molina, executive director of the Chamber of the Ecuadorian Automotive Industry (Cinae), the situation is the result of the absence, for six years, of a comprehensive public policy that regulates the industry, as this sector competes paying 15% of taxes on their inputs, compared to imported vehicles that enter with zero tariffs or with preferential rates for current commercial agreements.

Molina said that, as a result of the dialogue process promoted by the current government, a ministerial agreement was signed to regulate the assembly in the country.

There it is required that vehicles assembled in Ecuador contain 19% of locally manufactured parts.

On the other hand, a tariff table was developed inverse to the local content that allows a reduction of the tariff to imported auto parts, insofar as the national component increases.

However, this table has not been discussed in the full Committee of Foreign Trade (Comex) and without its official resolution the assembly industry loses competitiveness before the importers.

Consequently, the sector also alerts the loss of positions, direct and indirect employment. At the beginning of this year, the Cinae sent a letter to President Lenin Moreno explaining the delicate situation that the assemblers and manufacturers of parts go through, but until now there has been no response.

For this reason, the sector trusts that the new Minister of Economy and Finance meets its requirements. Luis Carlos García, manager of Imfrisa, a company dedicated to the manufacture of bearings and retainers, said that both development and investment in the auto parts manufacturing sector have stalled due to the lack of public policy and assured that there is uncertainty in the industry.

Juan Carlos Calle, of Faesa, manufacturer of air conditioners for cars, said the industry supports the commercial opening of Ecuador, but requires incentives so that competition is equal.

Motorcycles lost participation

Although not as dramatically as the automotive assembly, the motorcycle market also lost share in recent months, said Oswaldo Landázuri, manager of Metaltronic. Previously, this industry accounted for 80% of the market and is currently around 72%.

Despite this reality, motorcycle assembly already has a percentage of local incorporation that is approved and that makes the tariff of the CKD (imported component) of this type of vehicles 5%. This does not allow the fall in market share to be as sharp as that of cars.

Perspectives

Demand public policy

The representatives of automotive and auto parts assemblers assured that they do not oppose the commercial agreements signed by the country, but they demand a public policy that allows them to compete on equal terms.

19 percent is the projection of participation in the market until 2021 if the situation is not corrected.

Recuperation of Industrial squares

consider that an adequate public policy could recover about 2,000 jobs. (I)

Source: https://www.eltelegrafo.com.ec/noticias/economia/4/venta-vehiculos-ensamblados-ecuador