Driving growth

Colombia's automotive sector shows signs of recovery.

The automotive sector in Colombia has steadily improved since September 2020 when the global industry was severely hit due to the economic slowdown and logistics chaos caused by the COVID-19 pandemic.

According to the Association of Vehicle Dealers of Latin America, the sale of vehicles in the region amounted to 7.1% of global sales in 2019. Prior to the pandemic, national sales had experienced significant growth, reaching a total of 256,622 vehicles in 2018 and 263,684 in 2019.

The commercial director for one of the largest vehicle distributors in the country commented, “The reactivation last year happened faster and better than we predicted in April and May. Sales this year have also been better than expected, reaching 20,000 units per month with a month-on-month increase of 3,000 units.”

“Sales this year have also been better than expected, reaching 20,000 units per month with a month-on-month increase of 3,000 units.”

Commercial director, vehicle distributor, Colombia

Colombia, alongside Uruguay, had the lowest drop in sales during the first half of 2020 in South America, with a 38% drop compared to the previous year. This compares to 39% in Brazil and Argentina, 45% in Chile, 47% in Peru and 49% in Ecuador.

At present, vehicle dealers in Colombia are prioritising the sale of zero-emissions vehicles and truck fleet replacement for which the government offers significant tax benefits. Notably, the sale of electrical vehicles registered a 77.3% increase in 2020 compared to 2019, showing significant room for growth for this specific sub-sector.

The commercial director warned that it would take some time for electric vehicles to become an established market segment, “It will be several years before electric vehicles are a relevant category in Colombia, mostly due to the lack of charging infrastructure and the cost of the vehicles.”

A former executive of General Motors in Colombia agreed, “Electric vehicles are still an incipient business in the country, only two or three brands are present. It will take 2 or 3 years for this to change. The government has not developed the infrastructure, charging at home is very slow and the vehicles are still expensive. Hybrids are being well received though. What is interesting is that consumers and demanding lower-emission vehicles before the government is regulating for it.”

“Electric vehicles are still an incipient business in the country, only two or three brands are present. It will take 2 or 3 years for this to change.”

Former executive, General Motors, Colombia

Colombia has become a regional powerhouse in the automotive industry in Latin America. The country manufactured 127,000 cars in 2019 and, according to ProColombia, the diverse industrial activities in the sector contribute about 6.2% of the country’s GDP. Local sector experts claim that the future of the business in Colombia will be focused on increasing the efficiency and operational aspects of vehicles instead of continuing the trend of prioritising technological development.

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