Latin America –Opportunities for U.S. Automotive Aftermarket ExportsFebruary 25, 2016
Kellie Holloway is a Senior International Trade Specialist and Deputy Team Leader of the U.S. Commercial Service’s Global Automotive Team
Todd Peterson is an International Trade Specialist in the Office of Transportation and Machinery and Team Lead for the Auto Care Association’s Market Development Cooperator Program (MDCP)
The U.S. auto parts sector continues to be one of the largest contributors to total U.S. exports. In 2015, the U.S. exported nearly $81 billion in auto parts worldwide. One of the promising, but overlooked regions for U.S. automotive aftermarket parts exports is Latin America, particularly Peru, Guatemala and El Salvador. Demand for aftermarket auto parts and repair services in these three markets is increased due to aging vehicles (averaging 15.5 years for private and 22.5 years for commercial vehicles). In addition, there is a high level of used-car sales and deteriorating road conditions. US market share for auto parts in Guatemala is 31 percent, in El Salvador it is 26 percent, and US companies have a 19 percent share of the Peruvian market. Also worth noting: U.S. auto parts exports over the last five years grew 87 percent in Peru; 19 percent in Guatemala, and 50 percent in El Salvador.
In addition, these three countries are Free Trade Agreement (FTA) partners with the United States, which increases U.S. market access by breaking down potential market entry barriers. FTA partnership, product quality, available warranties and geographic proximity, all contribute to the United States having a competitive advantage when entering Latin American markets.
Some of the specific products/services in demand include:
- Motor parts: compressors, radiators, batteries, accumulators, green filters, motor oil, and lubricants;
- Body and crash parts;
- Accessories: sound systems, spoilers, bumpers, cleaning products;
- Safety Products: alarms, GPS systems;
- Brake systems, suspension and components;
- Driving simulators; and
- Tools and diagnostic equipment.
Recognizing the opportunities for automotive aftermarket suppliers in Latin America, the International Trade Administration (ITA) awarded the Auto Care Association a three-year matching award of just under $300,000 to support activities designed to help boost exports to that region. Upcoming events utilizing this Market Development Cooperator Program (MDCP) project are two automotive trade missions to Latin America. The first mission is destined for Peru (May 17-19, 2016), followed by a mission to Guatemala with an optional stop in El Salvador (June 21-24, 2016). Future missions are planned to Chile, Colombia, Costa Rica, and Honduras.
“The MDCP award creates important partnerships that assists U.S. firms in selling more of their goods and services to the 95 percent of consumers living outside our borders,” said Assistant Secretary of Commerce for Industry & Analysis Marcus Jadotte. “We are excited to help the U.S. auto care industry increase exports in Latin American and expand economic opportunity in such an important sector of the U.S. economy.”
The Automotive Trade Missions to Peru, Guatemala and El Salvador are designed to inform participants of the local market and provide access to key industry contacts. The number of mission participants is intentionally limited to ensure customized and well-targeted matchmaking scheduling. In addition, U.S. Embassy staff will provide country commercial briefings on the legalities and nuances of doing business in those markets, with the schedule rounded out to include industry-specific networking receptions and site visits. The Auto Care Association’s upcoming missions are an extremely cost-effective way to expand your business prospects in Latin America. The package includes personalized business-to-business matchmaking meetings with foreign industry executives, hotel accommodations and local transportation, networking receptions, interpreters, and country briefings.
A past trade mission participant relayed the value that joining a supported mission provided. “We’ve boosted sales by 70 percent in Latin America and could not have done it as fast without the U.S. Commercial Service,” said Ross Tamimi, Vice President, Warco Products. The contacts that Ross made while on the mission helped the firm understand local commercial dynamics and regulatory policies, and successfully identify local distributors.
Harness your share of these growing Latin American economies and expand your export strategies through both Automotive Trade Mission opportunities!
For more information on auto parts exports, please see ITA’s Top Markets Report for Automotive Parts.