The automotive industry loses 2,000 jobs in two years

Ecuadornews:

The industrialists engaged in assembling vehicles in the country claim to be living what they noticed last year: compete in unequal conditions in the midst of an avalanche of imported cars, subtract ground in the market, reduce sales and with it the possibility of holding jobs. In the last two years, they say they have already lost 2,000 jobs.

It is a consequence that is reflected in the figures of the Chamber of the Automotive Industry of Ecuador (Cinae) that, until August of this year, continued to register the decline of this sector. Until that month, the industry had a share of 26.7%, well below the 36% it managed to achieve in the same month of 2017 and 47.4% that it obtained in 2016.

The low dynamics of the sector, says David Molina, president of Cinae, is explained by the unequal conditions with which this union has been competing, having to pay a 15% tariff on the parts and pieces (CKD) it requires to join. A payment that is not required of the imported.

“And this worries us a lot, because these figures speak of how the industry is weakening, there are companies that are entering a serious problem of sustainability. I would even say that this sector is at a high risk of disappearing. “

This distorted competition is what has caused the Ecuadorian car to be displaced by vehicles that come at a better price from countries such as Colombia. From January to August, 10,226 units were sold, 5,119 more than in the same period last year. “We know it’s better to bring an armed car from the outside, but what about this? The State loses because finally that vehicle enters with 0% tariff, the country loses because we lose production, exports and the possibilities of maintaining or continue generating jobs. “Before this industry, together with the auto parts sector, generated 8,500 jobs, today only 6,500.

According to Cinae, until August the assemblers managed to place 26,942 vehicles on the market, 1.5% more than in the same period last year, but a slight increase compared to the 50% recorded by the foreign car. It is that today import is more attractive, even for the own vehicle assemblers. Before, 80% of General Motors’ offer came from local production, today that percentage fell to 55%. The same has happened with Ciauto, which reduced its production from 90% to 60%.

That has led to some models of cars like the Sail II or the Grand Vitara stop assembling in the country and, that begin to be brought or replaced by new models, arriving from abroad. But bringing armored cars from outside not only affects the assemblers, but the auto parts sector, which this year has seen a 20% drop in the demand for parts and pieces of vehicles.

So says Luis Carlos García, manager of Amortipartes, a firm that after an investment of $ 5 million began operating in 2014, but now a paralysis is being considered. “If I do not produce a certain number of shock absorbers I will not be able to pay the fixed costs that the plant has. Producing more than what is demanded is filled with inventory, so it is likely that we have to stop in December and see how we can start next year, “he says.

The risk of disappearing, they say, is not an exaggeration, when year after year this sector must face galloping competition. They speak with fear of the market that can be subtracted from the European car, when their tariffs have finally been reduced in 2020, or from the income of the Mexican offer if a commercial agreement with that central country were signed.

The origin

The Colombian offer doubles

After Ecuador, China is the main supplier of cars in the local market. From January to August of this year, the offer from the Asian country reached 10,664 units, versus the 5,244 that it achieved in the same period last year. This ranking is followed by South Korea – which until August was able to raise its offer from 9,337 to 10,388 – and Colombia, one of the few that has managed to mark a pronounced growth in this market. According to Cinae, sales in this country doubled from 5,107 to 10,226 units. In the list, they are followed by Mexico, Japan, India and Thailand. (I)

Source: https://www.expreso.ec/economia/industria-automotriz-economia-ventas-importacion-HI2390559