Automotive is a best prospect industry sector for Colombia. Includes a market overview and trade data.
Last Published: 8/16/2018
Overview

Table 1: Colombia Automotive Production Data, 2015-2017 (1)
 
Auto Sector (in units)201520162017
Sales  281,885253,651238,237
Local Production 87,38695,119124,795
Imports 178,346158,532176,400
Exports 29,58438,73145,000
Total Market Size 236,148214,920231,164
 
Table 2: Colombia Automotive Parts Sales Data, 2015-2017 (2)
Auto Parts (USD millions)201520162017
Sales (3)3,9703,8953,849
   
 
 


 
Table 3. Colombia Automotive Parts Production Data, 2014-2017 (4)
Auto Parts (USD millions)2014201520162017
Local Production355321218-
Imports 4,0223,5673,2413,497
Imports from the United States829772525632
Exports444425366390
Total Market Size 3,9333,463 3,093-
Exchange Rates: 1 USDCOP 2,000COP 2,746COP 2,951COP 2,951
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
 

Table 4: Colombia Automotive Market Sales and Market Share by Vehicle Category, 2016-2017 (5)
Category 2016 Sales
(units)
2017 Sales
(units)
2016 Market Share %2017 Market Share %Variation in Sales Volume %
Private cars 138,866126,83654.753.28.7
SUVs68,21070,47926.929.63.3
Trucks and buses16,96113,7936.75.818.7
Pick ups14,26813,8725.65.82.8
Taxis 9,5558,5333.83.610.7
Vans 5,8214,7242.32.018.8
Total 253,681238,237100100 

Colombia is one of the largest automotive markets in South America, after Brazil and Argentina. The year 2014 was Colombia’s best year for auto sales in the past five years, with the sector experiencing a decrease of six percent from 2016 to 2017. The decrease was mainly caused by a drop in global oil prices, the devaluation of the Colombian Peso, and a slowdown in Colombia’s economic output (GDP), which grew an estimated 1.8% in 2017. Moreover, a tax reform package passed in 2016 raised the Value Added Tax from 16% to 19%, which has put a damper on consumer spending in general. Another important factor to consider is the growth of the used car market: for every new vehicle sold, four used vehicles are sold in Colombia.

Auto parts sales totaled USD 3.84 billion in 2017, a 1.2% annual decrease over 2016. According to the leading automotive parts association in Colombia, Asopartes, the decrease can be explained by a relatively weak Colombian Peso, the fact that several auto parts importers suspended imports due to the unfavorable exchange rate, and a reduction in trade with Venezuela, where auto parts sales have dropped significantly in recent years (6). 

At the end of 2017 there were 13 million vehicles in Colombia, according to data from the Ministry of Transportation and the automotive association Andemos. Of those, 912,142 were registered for transportation (freight and passenger) and 7.4 million were motorcycles (57%). Not including motorcycles, 83% of Colombian vehicles are for private use, 16% are in public service, and one percent is for official use (7). According to research conducted by Business Monitor International in 2017, Colombia’s car ownership is still far from reaching saturation point.

A report conducted by the multinational banking group BBVA in 2015 estimates that the automotive sector contributes four percent to the country’s GDP and accounts for nearly 22,000 jobs. Colombia currently ranks as the third largest automobile manufacturer in South America. In addition, after Brazil, Colombia is the second largest motorcycle producer in the region, with an annual output of 533,000 units (domestic production satisfied 94% of local consumption in 2017) (8).

Several international auto manufacturers currently produce vehicles in Colombia. General Motors (Chevrolet and Isuzu), based in Bogotá, has an annual capacity of about 100,000 units, and in 2013 opened a stamping plant to manufacture and export body panels to markets in Central America and South America. Renault, based in Medellin, has an annual capacity of 80,000 units. Automaker Daimler's subsidiary Daimler Colombia operates an assembly facility in Bogotá and opened a new bus manufacturing unit in Funza (near Bogotá) in June 2015 to add to its existing small-scale production facility in Bogotá. The new facility has an annual capacity of 4,000 units. General Motors recently announced a significant investment in its local operations over the coming four years, which is likely to boost the country’s overall auto output (9).

Mazda Motor had a capacity of 15,000 units annually until its assembly plant closed in May 2014. The company’s plant in Colombia was only using 30% of installed capacity and suffered from relatively high production costs and low sales volumes in Colombia and regional export markets Ecuador and Venezuela. Mazda still sells imported vehicles in Colombia and provides after-sales service through its Mazda de Colombia subsidiary. Mazda sales increased 3 percent in 2017 and it ranked fifth in top-selling brands in the country (18,700 units sold).

More than 100 brands and 700 models of vehicles are found in the Colombian market. The biggest seller is Chevrolet (22% market share), followed by Renault (20% market share), with Nissan in third place (nine percent market share). Kia has dropped to fourth place (eight percent market share) (10). It is important to note that most of the GM passenger vehicles assembled in Colombia are based on Asian platforms, especially South Korea (Daewoo) and China (Shanghai General Motors).

In 2016, the ratio of nationally produced vehicles was 35%. The other 65% of vehicles were imported from Mexico, Japan, United States, Brazil and South Korea. Local production of vehicles in Colombia has been decreasing in the past few years. However, the high percentage of imports represents a good opportunity for imported parts and accessories, especially those from the United States, which are very well known and regarded nationwide.

Vehicle manufactures in Colombia are concerned with some Free Trade Agreements (FTAs) Colombia has signed with countries that have a large auto industry, as these countries can flood the market with cheap vehicles. Colombia has trade agreements with more than 25 countries and recently signed agreements with Israel and Panama. Further agreements are currently being discussed with Japan and Turkey, and this would likely boost the volume of imported vehicles into Colombia.
 
Firms from more than 100 countries compete to supply the Colombian automotive parts market, with China, the United States, Japan and Brazil having the highest market share. Firms from the United States and Brazil compete with quality and state-of-the-art products, while firms from many Asian countries have obtained larger market share pursuing a low-price strategy and offering lower quality.
 
In 2016, the annual production of automotive parts in Colombia was equivalent to USD 218 million, while exports accounted for USD 366 million. The main destinations for Colombia’s exports of auto parts are the United States, Ecuador, Peru, Mexico, and Chile (11). In 2017, imports represented USD 3.24 billion and were dominated by China (23%), the United States (18%), Brazil (8%), Japan (7.8%), and Mexico (4.6%) (12). 
 
The Colombian automotive parts industry faces several challenges, such as stolen vehicles, counterfeit products, and smuggling. During 2017, a total of 31,325 vehicles (including motorcycles) were stolen in the country, representing a decrease of 17.7% in comparison with 2016. This has created an illegal market for used auto parts valued at approximately USD 685 million in 2017 (13). The Government of Colombia is promoting awareness campaigns through national television and radio to prevent the purchase of stolen auto parts, and it is also enforcing legal penalties for consumers who buy illegal (stolen and counterfeit) auto parts. The awareness campaigns have contributed in the reduction of stolen vehicles in 2017.
 
Leading Sub-Sectors
Best prospects for automotive parts and accessories are:
  • Brake fluid
  • Transmission shafts, bearings, gears
  • Tires for small vehicles, trucks and buses
  • Tire retreading equipment
  • Tire recycling operators
  • Engines and engine parts
  • Filters
  • Insulated wire, cable
  • Electrical parts
  • Tire retreading equipment
  • Tire recycling operators
 
Opportunities
In terms of auto parts, the United States is Colombia’s second largest trading partner after China and Colombia is the United States’ seventh largest trading partner in Latin America.

Colombia provides the following opportunities to U.S. automotive exporters:
  • Vehicles
    • Electric vehicles could be a growth area, especially in public transportation. Such vehicles would have to have the requisite power to climb steep hills at high elevation while full of passengers.
    • The Colombian Central Bank continues to cut short term interest rates in 2018, a measure that might encourage commercial banks to lower auto loan rates (14). There are also signs that consumer confidence is rebounding after the national Value Added Tax was increased from 16% to 19% in January 2017.
  •  Auto parts
    • A. The high vehicle import percentage represents good opportunities for imported parts and spare and replacement parts and accessories, especially for U.S. products that are well known and regarded. Additionally, under the United States-Colombia Trade Promotion Agreement (TPA), some parts and auto parts (which were previously assessed an average tariff of 13%) currently enter the Colombian market tariff free, while tariffs on other parts will be reduced to zero over the next two to five years.
    • With the implementation of the TPA, Colombia is accepting re-manufactured auto parts listed under Chapter Four, Rules of Origin and Origin Procedures, Section A - Rules of Origin, ANNEX 4.18. Goods classified in the following Harmonized System subheadings may be considered remanufactured goods that would be allowed to be imported into Colombia: 8702, 8703, 8704.21, 8704.31, 8704.32, 8706, and 8707, 8408.10, 8408.20, 8408.90, 8409.91, 8409.99, 8412.21, 8412.29, 8412.39, 8412.90, 8413.30, 8413.50, 8413.60, 8413.91, 8414.30, 8414.80, 8414.90, 8419.89, 8431.20, 8431.49, 8481.20, 8481.40, 8481.80, 8481.90, 8483.10, 8483.30, 8483.40, 8483.50, 8483.60, 8483.90, 8503.00, 8511.40, 8511.50, 8526.10, 8537.10, 8542.21, 8708.31, 8708.39, 8708.40, 8708.60, 8708.70, 8708.93, 8708.99, 9031.49.
    • The country is currently formulating policies to allow importation of remanufactured products to meet commitments under the TPA with the United States.
    • Other provisions of the TPA include strong protection for U.S. investors (legal stability), expanded access to service markets, greater intellectual property rights protection, market access for remanufactured goods, increased transparency and improved dispute settlement mechanisms (arbitration). Under the National Treatment caveat within the TPA, U.S. companies must be treated as locals when they participate in public bids, eliminating the disadvantage they used to face prior to the signing of the agreement.
    • B. The Government of Colombia announced that as of August 6, 2014 (Decree 2910, 2013), it would eliminate tariffs on imports of raw materials and inputs for the automotive sector (manufacture of auto parts and vehicle assembly in Colombia), under the condition that they are not produced in Colombia. This decision was part of the Program for the Promotion of the Automotive Industry (PROFIA, by its Spanish acronym), which considers this sector key to the country’s development. The argument in favor of this incentive centered on the technology transfer effect of the automotive industry in terms of human capital formation and entrepreneurial learning, which are often transferred to other manufacturing sectors of an economy (15). 
Breakdown of end-users are as follows:
  • Freight and passenger transportation companies
  • Government agencies
  • Other end users: rental car and limousine companies
  • Repair and maintenance shops
  • Service stations, gasoline dealers and lubrication centers
Breakdown of distribution channels are as follows:
  • Dealers and distributors of imported vehicles
  • eCommerce sites that sell auto parts to end users (a relatively new channel of distribution in Colombia)
  • Importers and distributors of automotive parts and accessories
  • Sales representatives of automotive parts
  • Tire distributors
Trade Events
Expopartes   
June 5-7, 2019
Bogotá, Colombia
 
Web Resources
Norcia Ward-Marin 
U.S. Commercial Service Bogotá
Phone: 571-275-2703
Email: Norcia.WardMarin@trade.gov  

Key Contacts 
Association of Automotive Parts Importers and Dealers (ASOPARTES)
Colombian Association of Automotive Parts Manufacturers (ACOLFA)
Colombian Association of Motor Vehicles (ANDEMOS)
Colombian National Tax and Customs Directorate (DIAN)
Colombian Merchants Federation (Fenalco)
Colombian Statistics Bureau (DANE)
Government of Colombia
Ministry of Transportation
National Industrialists Association (ANDI)
National Transit Registration System (RUNT)
ProColombia (Export Promotion, Tourism and Investment Agency)

(1) Informe Sector Automotor up to December 2017, Fenalco – ANDI
(2) Informe Venta Autopartes, 2017, Asopartes
(3) Vehicle bodies and chassis are not included in auto parts sales
(4) Manual Estadístico 37 "El Sector Automotor Colombiano 2017”- Acolfa
(5) Colombian Vehicle Magazine “Motor”, Edition 691, 2018
(6) 
Informe Venta Autopartes, 2017, Asopartes
(7) Parque Automotor Colombia, 2016, Andemos
(8) Manual Estadístico 37 "El Sector Automotor Colombiano 2017”, Acolfa
(9) 
Colombia Autos Report 2017, Business Monitor International
(10) 
Informe Sector Automotor up to December 2017, Fenalco – ANDI
(11) Statistics Bureau - DANE; Global Trade Atlas - Colombian Exports Autoparts
(12) Global Trade Atlas, Colombian Imports Autoparts
(13) Informe Hurto de Vehículos, April 2018 – ASOPARTES
(14) Colombia Autos Report 2017, Business Monitor International; Dinero Article, Jan 29, 2018
(15) BBVA Research "Automobile Market Outlook, Colombia 2014” – GOC Productive Transformation Program – Auto parts and Vehicles Industry.

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Colombia Automotive Trade Development and Promotion