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Vibrant car culture continues to drive Chilean automotive sector

Thursday, May 3, 2018 - 06:00
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Chile is often cited as being the envy of other nations in this hemisphere. They enjoy a vibrant democracy, they have strong social programs, and an economy that has managed strong and steady growth consistently since the mid 1980’s. It also goes without saying that this nation of 18 million people is among the most picturesque and ecologically diverse nations in the world. The good news for the automotive industry is that Chile enjoys a vibrant car culture that has been gaining momentum over the past 30 years.

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The liberalization and reorientation of the economy during the late 1970’s and early 1980’s was dubbed the “Miracle of Chile” by renowned economist Milton Friedman. A combination of a resurgent democracy and the freeing of markets, allowed for greater economic investment. This resulted in sustained economic growth, with Chile having maintained a 4.2 percent per capita GDP annual growth rate since the 1980’s. Chile has also embraced free trade, signing free trade agreements (FTA’s) with over 65 countries. In fact, the U.S. entered a FTA with Chile in 2004, slowly reducing tariffs until 2015, at which point all trade between the two countries became 100 percent tariff free. Bilateral trade is valued at more than $30 Billion, with the U.S. enjoying a nearly $9.1 Billion trade surplus. 

The economic improvements of recent decades have been very broad based throughout the population, allowing many working families to enter the middle class. As it has happened around the world, as family disposable incomes rise, private car ownership rises as well. Chile has seen an explosion of its motor vehicles per capita since the early 2000’s. In fact, between 2001 and 2016, passenger car density increased over 300 percent, from 85 vehicles per 1,000 people to over 260 per 1,000 people. Since there has been no vehicle manufacturing in Chile since 2008, all new vehicle sales are of imported vehicles. The last manufacturing facility, a GM plant that made LUV utility vehicles, closed in 2008. 

Car sales in Chile had a very strong year in 2017. The market rose 18.2 percent over 2016, marking its best year of growth since 2002. Nearly 362,000 new cars and trucks were sold. Market share amongst the major auto makers in Chile is well distributed, with the Hyundai/Kia brands combining for a 17.5 percent market share (9.2 percent & 8.3 percent, respectively.)  Chevrolet came in second with 9.0 percent market share, mostly on the strength of the Chevrolet Sail, which GM builds in China. Nissan (8.0 percent) and Suzuki (7.5 percent) rounded out the top 5 best-selling brands in 2017. Mitsubishi Motors (ranked 10thin total sales) had the best-selling vehicle in Chile, on the strength of the Thailand made L200 compact pickup, selling over 9,800 units. The Hyundai Accent was the best-selling passenger car, with sales just over 9,500 units.  With a total of 5 million cars and trucks on the road, and an average vehicle age approaching 9 years old, there are ample aftermarket opportunities in Chile.

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