Put it Together

Although imports have traditionally made up the majority of the automotive market in Ecuador, domestic production has taken an increasing market share over the past decade, with the assembly sector growing by 37% in 2010 and its share of the domestic market rising to 45%, up from 30% a decade earlier. The largest number of imports continue to come from South Korea and Japan and are comprised mainly of Hyundai, Kia, and Toyota branded vehicles. However, vehicles from the US, Mexico, and Colombia have begun to take a growing share of the import market, pushing South Korean and Japanese imports down from 69% of total imports in 2009 to 45% in 2010.

General Motors (GM) vehicles, which are distributed by Ómnibus BB, have, by far, the largest share of the overall automobile market in Ecuador. In particular, GM’s Chevrolet brand cars, trucks, and SUVs made up over 40% of all vehicles sold in Ecuador in 2010. With its large market share, Ómnibus BB runs two automobile assembly and manufacturing plants in Ecuador, and has plans to continue upgrading its production capacity as demand continues to grow.

Ayasa (Automotores y Anexos), which represents Nissan and Renault in Ecuador, is another major player in the market and has seen its market share nearly double from 3.7% in 2005 to over 7% in 2010. As Nicolás Espinosa, Executive President of Ayasa, explained in an interview with TBY, “Ecuador has experienced a very important social change in the last decade, and the industry has clearly benefited from that.” As incomes have increased, “acquiring a car has become one of the main priorities of the population.” Increased access to credit has also been a major factor in this change. Espinosa explains that, “we can currently offer credit lines for five, six, and even seven years, while in 1998 such credit lines were available only for periods of up to 24 months.”

Increasing availability to vehicles for all segments of the population has been a priority of the Ecuadorean government, and it has instituted a number of policies aimed at increasing domestic production of low-cost vehicles, such as a Special Consumption Tax (ICE) on purchases over $20,000 and restrictions on imported vehicles. Maresa, which represents Mazda, Geely, and Fiat in the Ecuadorean market is planning to take advantage of this change in the profile of car consumers, explains Francisco Restrepo, Executive President. The tax “has motivated Maresa to commercialize Geely and Fiat, brands that can offer cars for under $20,000… our strategy is aligned with the country’s regulations and changing consumption habits.” The company is investing in new assembly facilities for these lines of vehicles, most of which will come on line in 2013.

Another major change in the industry has been the growth of Ecuador as an automobile exporter. Compared to 1992, when Ecuador’s automotive exports were negligible (855 units), the industry has grown exponentially, with over 25% of all vehicles produced in Ecuador destined for export in 2010. From 2002-2011, exports have tripled, and the trend is expected to continue, as major exporters like Ómnibus BB and Maresa continue to invest in production. Ómnibus BB, which produces just over half of the vehicles exported, currently sends almost all of its exports to Colombia. However, its Managing Director, Fernando Agudelo, explained to TBY that “for 2012 [the company is] planning to return to the Venezuelan market.”

With this combination of growing consumer demand, increased export capacity, and an increasingly diversified production market, the automotive sector in Ecuador looks set to continue on a strong upward growth trend.