Colombian vehicle sales rose in December 2009 for the first time in two years, and industry leaders expect a rebound in 2010 as the economy recovers and interest rates stay low.
Car sales in December 2009 rose 19% compared with the same month in 2008.
Despite the recovery in December, sales for the whole of 2009 finished down 17% at 181,065 units, from 217,048 the previous year. The decline came on top of a 16% decline in 2008.
“In the first half of 2009 there was a lot of uncertainty, people just didn’t know how serious the crisis would be, so they wouldn’t buy expensive goods such as cars,” Miguel Alvarez, the CEO of Colitalia Autos, which imports Fiat SPA (FIATY) cars into Colombia, told Dow Jones Newswires.
“As people realized the crisis was not as serious as first feared, the situation improved in late 2009,” Alvarez added.
Alvarez, whose company signed a deal with Fiat in 2008 after the brand had been absent from Colombia for a couple of years, said his firm sold 400 cars in 2009, up from 150 in 2008.
Colitalia is taking advantage of the strong peso, Fiat’s improved image and a deal with U.S. carmaker Chrysler to boost sales in Colombia. Alvarez expects to sell 1,500 cars in the country in 2010.
He sees the Colombian car market growing by 5% to 8% in 2010 to sales of 195,000-200,000.
From 2004-2007, car sales rose more than 20% annually as a strong peso, a growing economy and improving security encouraged people to buy vehicles. Sales hit a record of 258,463 cars in 2007.
German Calle, the chief executive of the local assembler of France’s Renault, the second-largest car maker in Colombia behind General Motors, also predicts sales growth this year. He expects Colombian sales to end the year at around 200,000, helped by lower interest rates.
Colitalia currently charges 18% to 24% a year on auto loans, down from close to 30% a year ago. Interest rates for Colombian consumers have fallen as the central bank slashed its key rate to a record low 3.5% in a bid to stimulate the country’s contracting economy.
While Fiat and Renault have seen sales rise thanks, they say, to marketing efforts and attractive new models, General Motors lost some ground. Sales of Chevrolet, its main brand, fell 17% in 2009 from the previous year.
A rebound in domestic demand will help local car assemblers recover from the loss of Venezuela as an export market, after Venezuelan President Hugo Chavez imposed restrictions on Colombian imports during a dispute over U.S. military bases in Colombia. (Dow Jones)