– Increase in hybrid/vehicle demand due to various government support benefits and changing perceptions
– To the extent that supply shortages/delays may occur due to a surge in demand
Colombia's automobile sales market is the fifth-largest market in Latin America after Brazil, Mexico, Chile and Argentina, and is a market that many automobile manufacturers continue to enjoy. In particular, Colombia's new car sales in 5 are expected to grow by 2022% compared to the previous year, and hybrid and electric vehicles are showing high sales growth, so expectations are even higher.
HS CODE
8703.40-Passenger vehicle (Spark-ignition engine + propulsion motor), 8703.80-Passenger vehicle (only equipped with propulsion motor)
Colombia Hybrid and Electric Vehicle Sales Market Growth Trends
According to data released by the Colombia Automobile Association (ANDEMOS), hybrid and electric vehicles accounted for 21% of the new car sales in Colombia in '7.06, and recorded a sales growth of 194.8% compared to the previous year. Colombia has an automobile assembly industry in Korea, and domestic vehicle production is 111,169 units, accounting for about 250,427% of the total sales of 44 units. However, among the automobiles produced in Colombia, there is no production of hybrid or electric vehicles, and thus the entire production is dependent on imports. In the case of hybrid or electric commercial vehicles (buses), infrastructure that can be assembled in Colombia is planned, but electric passenger cars are expected to continue to rely on imports as there are no plans to be discussed yet.
Colombia Car Sales Market Trends
Colombia Statistics Korea announced that as of '21, Colombia's total market size including automobile sales, maintenance/repair services and related markets was approximately $57 billion. It recorded a growth rate of about 19% compared to the size of the market in '20, when it recorded a decline due to COVID-17.8. In particular, it was analyzed that in '21, as outdoor activities resumed due to COVID-19 vaccination, the number of people using public transportation increased. Although new car sales are showing an overall recovery after the pandemic, it is still low compared to 20 years ago. In particular, the used car transaction volume increased significantly in '21 as a combination of factors such as a rise in the value of the dollar, a shortage of semiconductors, a shortage of supply and demand for empty containers, and an increase in shipping freight costs affected the price and supply of new cars.
<Colombian automobile-related market size change trend>
(Unit: million dollars, %)
Note*: projections
[Source: ANDEMOS, DANE, EIU]
<Colombia Annual New Car Sales Changes>
(Unit: Large, %)
Note*: projections
[Source: ANDEMOS, DANE, EIU]
Colombia Hybrid and Electric Vehicle Market Trends
Sales of hybrid and electric vehicles in Colombia are growing every year. Consumers who want to purchase hybrid and electric vehicles also consider environmental aspects such as fuel efficiency and emission reduction, but they consider incentives for eco-friendly vehicles in Bogota and major provincial cities as the most important factor in purchasing. This is because the government is providing various benefits, such as tax reductions and exemptions from the two vehicle system, when using hybrid and electric vehicles.
<Colombia Annual Hybrid and Electric New Vehicle Sales Changes>
(Unit: Large, %)
Note*: projections
[Source: ANDEMOS, DANE, EIU]
Hybrid vs Electric Vehicles
In Colombia, the demand for hybrid vehicles is higher than for electric vehicles due to the lack of electric vehicle charging infrastructure. Colombia does not yet have enough charging stations for electric vehicles, and if you live in an apartment other than a private house, most parking lots are either banned or do not have plugs to charge them at all. Therefore, when comparing based on the number of hybrid and electric vehicles sold, the sales volume of hybrid vehicles is much higher than that of electric vehicles.
<Colombia Annual Hybrid and Electric Vehicle Sales Changes>
(Unit: Large, %)
[Source: ANDEMOS]
Based on total sales in '21, Toyota accounted for approximately 39% of total sales, making it the best-selling hybrid and electric vehicle brand in Colombia. In particular, six brands out of the top ten entered the rankings by three Japanese and German brands, and the other four brands were occupied by Korea, the United States, Sweden and China.
<Sales status of hybrid and electric vehicle brands in Colombia in '21>
(Unit: Large, %)
[Source: ANDEMOS]
Colombian Government Policy for the Utilization of Hybrid and Electric Vehicles
The Cole government is carrying out a project to replace buses with electric vehicles, mainly in Bogota and Medellin, to protect the environment and reduce carbon emissions. In addition, according to the decree announced in July 19, at least 7 public high-speed electric charging stations must be installed in Bogota and at least 10 in provincial cities, 5% of parking spaces for electric vehicles are allocated in public and commercial buildings, and electrical connection devices for electric vehicle charging are required in residential and commercial buildings. Accordingly, parking spaces and charging facilities dedicated to electric vehicles have been installed in most large department store parking lots. In the case of residential buildings, in-parking electrical connections are being designed around new buildings. However, the infrastructure is still insufficient for the full commercialization of electric vehicles.
Colombia Hybrid and Electric Vehicle Import Trends
Hybrid cars imported to Colombia are largely made up of Korean, American, and Japanese brands. In the case of Korea and the United States, automobiles are produced and exported directly in their own countries, but Japanese brands have production plants in Brazil, so they are exported from Japan and Brazil. Toyota, for example, exports mainly to Latin American countries through its production plants in Brazil. Toyota has a production base in Brazil and has advantages such as reduced transportation costs and reduced tariffs when entering the Latin American market.
<Colombian hybrid vehicle (hs code 8703.40) import trend>
(Unit: million dollars, %)
[Source: GTA]
In the case of Colombian electric vehicles, they are imported from China by waterway, because electric commercial vehicles such as buses are imported from China. In addition to this, electric vehicles produced in European countries are also imported, but these are premium passenger car brands that are mainly aimed at high-income groups.
<Colombian electric vehicle (hs code 8703.80) import trend>
(Unit: million dollars, %)
[Source: GTA]
<Average market price of hybrid cars sold in Colombia>
[Source: SICEX, official website of each company]
Colombia Hybrid and Electric Vehicle Distribution Structure
<Colombian imported hybrid and electric vehicle distribution structure>
[Source: Fitch solutions, organized by KOTRA Bogota Trade Center based on local company information]
Colombia Imported Hybrid and Electric Vehicle Certification and Applicable Tariffs
When exporting hybrid and electric vehicles to Colombia, gas emission certificates, tire quality and environmental certificates, and parts descriptions for unused spare parts must be submitted.
<Tariff rate applied to imported hybrid and electric vehicles from Colombia>
[Source: Arancel legis]
expert comment
Oliverio Garcia, president of the Colombia Automobile Association, said in an interview that the hybrid and electric vehicle market in Colombia is promising. In the short term, he predicted that sales of hybrid vehicles would increase, he said, explaining that hybrids would help alleviate environmental problems in large cities with low emissions and high air pollution. In the case of electric vehicles, he added that there is sufficient growth potential in the long term if the electric charging infrastructure is improved.
implication
Although it is difficult to show rapid sales growth in the short term due to the insufficient supply of infrastructure for public charging stations in Colombia, if the problem is resolved, the sales rate is expected to increase significantly. In particular, as there are replacement projects for public transportation electric vehicles mainly in large cities, the demand for related parts market is expected to increase in addition to new cars. Hybrid cars are already expected to continue to increase in demand due to government benefits, fuel cost reduction, and changes in social perception about environmental pollution. It is expected.
Source: Fitch solutions (2022 1Q), EIU (2022.2), ANDEMOS, DIAN, GTA, SICEX, ARANCEL LEGIS, DANE, company official website (Toyota, Suzuki, ford, kia), PIXABAY, KOTRA Bogota Trade Center