Another difficulty one might discover in trying to sell in Central America is the variation of the vehicle parc. Within the seven-country region, there are approximately 4.6 million cars and trucks in operation. Vehicle populations range from a scant 40,000 in Belize, to nearly 2 million vehicles in Guatemala. The entire region would be considered a relatively small market, even if it were one country. But we must point out that from 2005 to 2015, the vehicle population in Central America grew 87 percent.
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In most of the region, used car sales far outstrip new car sales, with many of those used cars being imported from other regions. Some of the smaller countries don’t track sales or registrations by make and model, making a comprehensive vehicle in operation list virtually impossible. At a macro level, the best-selling makes and models don’t vary too much.
Toyota has been the market leader in Central America for nearly 40 years. Across the region, Toyota has an average market share of approximately 24 percent, with the Hilux pickup and Yaris small car being their two most popular models. The fastest growing brands over the past decade have been Hyundai and Kia, as they hold the second and third most market share, but they combine to form about 32 percent of the market. Nissan is a solid fourth in the region with an average 12 percent market share. Those top four brands represent about two-thirds of the overall market. The remainder of the market is made up of Suzuki, Honda and Chevrolet, each accounting for about 5 percent, while other brands have even less.
Many manufacturers currently selling in the region have dedicated sales forces designated for Latin America. Spanish is the dominant language in Central America, therefore it’s important to have your marketing programs developed with local cultural and language cues. Merely translating from English seldom suffices in such situations. Those brands that can bring quality and value always have an advantage. But there are many brands who meet that relatively low bar. The brands that exceedingly dominate in a crowded market are those that can share enhancements like electronic cataloging, marketing programs, technical and sales training and other value-added perks.
According to several manufacturers that are active in the region, the single most important thing a company can do to grow its sales in Central America is technical training. “There is not enough education on the difference between low cost/quality and high value-added brands,” said Marutiak. “Website and mobile application enhancements are absolutely required to grow business within the millennial market.”
The large manufacturers often organize both local and regional training events that cover technical issues like diagnosing a problem, installation techniques and product updates. These classes are highly prized by service professionals and are often very well attended.
If you are looking to expand into the region, it often helps to find a local representative that can navigate the landscape, and guide to customers who would benefit most from selling your products. The relatively small market size, combined with the variety of countries, often makes it hard to make individual trips to each country. Having a representative covering the market is efficient, and can alert you to potential issues before they become problems.
For those seeking to sell directly, there are several trade shows that are popular with Central American buyers. AAPEX is often well attended from people in the region, as is the INA/PAACE show in Mexico City. The newest show that has caught the attention of many in the U.S. is the Latin Auto Parts Expo, which is held in Panama City. In 2018, the show will take place in late July.
What may once have been an afterthought as far as the automotive market was concerned has matured into a potentially lucrative and growing region. While competition from Asia remains strong, the removal of tariffs through CAFTA and PTPA has given U.S. manufacturers an advantage, albeit a small one. Leveraging on high quality, high value auto parts, and promoting enhancements like customer training, electronic cataloging and strong brand marketing will put U.S. suppliers in control of their own destinies in Central America.
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