Main Indicators

How have you looked to adjust your operations in the Panamanian market?

AutoStar has been in Panama since July 2012. In 2010, we started with due diligence and market research in Panama, flying in on a weekly basis to get an idea of the operations here. Our growth in Panama has been extremely good because the brand is in very high demand. In terms of the Mercedes-Benz brand, we are working hard every day to improve our service, which is the most important part of our business. The most important aspects include taking care of the client, making sure you have the right parts in stock, and maintaining a training program for our technicians. In this business, you need to have a lot of capital. You have infrastructure that you need to pay for, and then you need to have a lot of stock because clients do not like to wait for their car. The finances also need to be in order as factories are paid up front. When a car arrives in Panama, it is already paid for, and we then sell it two or more months later.

How would you evaluate your financial performance over 2013?

We had extremely good growth. To improve sales we need to offer competitive prices and good service. And that is the big difference between us and the local dealerships of our competitors. This way, we get an attractive price, and we can transfer that price to the client. We are utilizing this strategy in the first two or three years, as a way of penetrating the market. In the luxury segment, we are always compared with BMW and Audi. In that segment, historically, Mercedes-Benz has a 10% market share. That is too little for this big luxury market. We started in May 2012, and went from 129 units to 365 in 2013. Now, we are experiencing extremely good growth. This is also because clients in Panama are looking for something else; they are looking for better service. When you buy a Mercedes-Benz, you are buying an experience. You are also buying an excellent product and our new products are the best!

What models are particularly exciting for you in this market?

Mercedes-Benz has changed a lot, and you can now see many new products, including the new generation compact cars (NGCC), namely the A Class, CLA Class, and GLA Class. These models are helping us to attack a segment of clients that we couldn’t before. In 2013, Mercedes-Benz was number one in the US after BMW and Audi, and that is because of the new-generation cars. We expect that 20% of our sales are going to be in this area. The Panamanian market, however, prefers SUVs, and 70% of our sales are SUVs.

You have presence in five countries. What are your future plans for expansion?

We started expanding 23 years ago when we came to Peru. And in 10 years we want to be in Ecuador, Colombia, and Guatemala.

What was your financial performance here in Panama for 2013? And what are your expectations for 2014?

Last year we sold about $45 million worth of products, and we are expecting to sell $65 million this year. We need to have a sale of 900 units across the whole range, which includes Mercedes-Benz, the Chrysler brands, including Jeep, Dodge, Ram, and Freightliner trucks from Daimler.

What other investments will you make this year?

We’re investing around $2 million to give our head office a facelift. We’ll then be investing $5 million in new showrooms and our principal workshop for Mercedes-Benz and Chrysler in the Santa Maria Business District. This will afford us the largest workshop in the luxury car segment in Panama. With this kind of investment, we send a hard message to our clients that they can trust us as partners

How important is the concept of innovation for AutoStar?

I think it is an area where Mercedes-Benz is the best, and we are improving a lot. Mercedes-Benz is all about technology, design, and innovation. For example, in the next two years we will have 25 new models from Daimler. That is incredible for Mercedes-Benz. We do not have a competitor that can introduce 25 new products in two years. That is something that Mercedes-Benz is investing a lot in. It is also looking into new technologies for hybrid cars, electric cars, and more.

The luxury car sector grew by 19% in 2013 in Panama. What’s behind that?

I think Panama offers what no other countries in the region do: politic stability, logistics facilities, attractive financial options, and a government and private sector that invest a lot. A lot of international companies are arriving and bringing in managers from other markets. Those managers need cars, so they are responsible for a lot of this growth. But another reason is that the upper-middle class is also growing in Panama. That kind of growth leads to an expansion of the luxury segment. Panama has low taxes compared to the region, making it an attractive place. Also, financing from banks is very aggressive, and people like cars. It’s now cheaper to get a car here. Indeed, cars in Panama are cheaper than in the other markets we operate in. The tax rate on cars in Costa Rica is 65%, whereas it is just 25% in Panama.

© The Business Year – May 2014