Colombia is on track to experience its weakest car sales in the past 15 years, according to data from Andi and Fenalco.
As of October 2023, new vehicle sales have slowed by 38.8% compared to the same month in 2022.
In contrast, electric vehicle sales have grown by 10.4% and hybrid vehicle sales by 5.2% over the same period.
October also saw a significant 45% decline in commercial vehicle sales compared to the previous year.
Cities experiencing the greatest sales slowdown in October 2023 were Funza at 54%, Medellín at 51%, Cartagena at 44%, Cota at 40%, and Barranquilla at 39%.
From January to October, 147,869 new vehicles were registered, showing an overall drop of 32.1% from the same period in 2022.
The year 2009 remains the worst year for vehicle sales, following the Lehman Brothers collapse in the U.S., with 185,128 vehicles sold.
To avoid 2023 ending worse than 2009, the auto industry must sell 18,629 units in both November and December.
However, the average monthly sales for this year stand at just 14,786 units.
High interest rates, fueled by double-digit inflation, remain a significant barrier for consumers and businesses seeking new loans.
Background
In context, the automotive sector is often viewed as a barometer for a country’s overall economic health.
Therefore, the declining car sales in Colombia could be a sign of broader economic issues.
Historically, the lowest point for the auto industry came in 2009, after the global financial crisis caused by the collapse of Lehman Brothers in the U.S.
The situation now mirrors the challenges faced then.
Interestingly, while traditional vehicle sales are down, electric and hybrid vehicle sales are showing growth.
This could point to changing consumer preferences, possibly driven by environmental concerns or long-term cost savings.
High interest rates are currently a deterrent for new purchases, which indicates inflationary pressures in the Colombian economy.
Addressing these economic challenges could be key to reviving the automotive sector and, by extension, the broader economy.