Mazda to shutter their car plant in Colombia

The Colombia factory that makes cars for Japanese brand Mazda has announced that they will cease production in April.

On April 30, the plant’s remaining 500 employees will go on mandatory vacation, pending a final decision from Mazda headquarters in Japan, La Republic newspaper reported on Wednesday morning.

The company had been responsible for producing Madza’s  2, 3 and 6 series sedan and hatchbacks in Colombia, as well as the BT-50 pick-up.

“Sales volumes are not sufficient in proportion to the production of the plant,” said Fabio Sánchez, President of La Compañía Colombiana Automotriz (Colombian Car Company).

The company said the plant had already been at only 30% capacity, shedding 1100 employees in recent months.

“Sales volumes are not sufficient in proportion to the production of the plant”

Carmakers hurting

Figures released on Monday by the National Administrative Department of Statistics (DANE) showed car production in January 2014 fell 29.8% from the same time last year.

This comes at a time when Colombian car ownership is exploding, but there is heavy competition from overseas.

MORE: Colombia’s car industry starts year slow, expects improvement

According to Spanish bank BBVA, in 2010 a person would have needed 3.2 years of salary to buy an economy-range vehicle, this fell to 2.6 years by the end of 2012. This, along with a cut in tax on fuel prices, has enabled middle-to-lower income households to purchase a car.

But a decade ago imported cars only represented 50 percent of sales, rising to 70% in 2012. Around 68 car brands compete in the market and free trade deals with Korea and the United States make it cheaper and easier than ever before to import cars to Colombia.

Manufacturing hurting in general

Colombian industry has shown a slight increase in production, the first time there have been two months of positive figures since 2011.

Industrial production, excluding coffee processing, showed an increase of 0.1% compared with the same period a year ago, according to DANE figures from January.

MORE: As peso weakens, Colombia’s manufacturers still hurting over US trade deal

In the last twelve months to January 2014, the actual production of manufacturing, excluding coffee processing, decreased 1.6% and the number of people employed by the sector decreased 2.2%.


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