China hits the accelerator in bid to dominate Latin America’s auto market

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With some mistrust, Claudio Pérez bought his first Chinese family car. Two years later, this Chilean teamster does not regret the purchase. He says his next vehicle will also be made in China.

“The Chinese brand is stigmatised, but the van was impeccable, I’ve had no problems”, said Pérez, 47 years, who traded years of buying Korean cars for a model from the Chinese firm Jetour.

He was not convinced at first given the poor reputation of early Chinese automobiles, but he urgently needed to buy a car. He was recommended the brand and he “is not sorry” with his choice.

Chinese vehicle makers have pushed pedal to the metal in recent years. With multiple brands that combine price and quality they have managed to conquer the Latin American market, rising ahead of the United States and Brazil.

In the last five years, China has quadrupled sales to the region. In 2019 it sold US$2.18 billion of cars, in 2023 it hit US$8.56 billion and 20 percent of the market to become the main supplier to Latin America, according to the ITC International Trade Centre.

The United States, which boasted the first position in 2021, reached 17 percent, whereas Brazilian vehicles dropped from 14 to 11 percent of the market last year.

In the budding market of electric vehicles, the dominance is even greater: 51 percent of sales in the region were from the Asian giant, while practically all electric buses are Chinese.

“The growth of Chinese automakers over the last few years has been exponential, thanks to significant improvements in quality, technology and design,” said Andrés Polverigiani, automotive intelligence manager for the Nyvus consultancy firm.

No other market outside of Asia has such a share of cars of this origin, which proves the importance of Latin American economies to China, the second business partner in the region, according to the ITC.

In the European Union and the United States, two markets with a strong auto industry, the imposition of tariffs has prevented them from progressing more strongly.

Though small, the Chilean market is considered one of the most competitive in the world. Practically free of tariffs due to a wide range of business treaties, 80 brands of 28 origins offer more than 600 models of vehicles.

The arrival of Chinese cars into ports across Latin America seems endless.

“A Chinese car here competes with the same features as an American or European car. The lower tariffs have also led to very competitive prices,” said Diego Mendoza, the president of Chile’s National Automotive Association.

Last year, Chinese cars accounted for nearly 30 percent of sales in Chile.

Like Chile, as in Ecuador, Peru or Colombia, the Chinese idea is to dominate the market. In Brazil and Mexico, the largest regional markers, Beijing wants to sell and produce.

The massive BYD auto-maker makes cars in Camacarí, in northeastern Brazil. It is the biggest electric-vehicle factory outside of Asia, with a capacity to produce 150,000 vehicles a year.

Another manufacturer, GWM, has bought a Mercedes-Benz factory in Iracemápolis, São Paulo, where it plans to produce 100,000 electric vehicles a year.

“Brazil is a country with a high volume of sales, a low presence of electric vehicles and a low presence of Chinese cars. If I were an executive for a Chinese auto company, I would also be very interested in the Brazilian market,” said Cassio Pagliarini, an industry specialist with Bright Consulting.

China has managed to attract consumers after associating itself with large automakers, in alliances which have helped to lower the cost production processes and improve available technologies.

“People have been testing them and adopting them within their preferences,” said Rubén Méndez, marketing manager at Chilean car-seller Movicenter.

As for prices, José Carlos De Mier, Nyvus’ representative in Mexico and Puerto Rico, explained that “in some Latin American countries, Chinese brands are offering more for the same price.”

In Latin America, Chinese cars have improved access to first-time buyers in medium- and low-income segments of the population and focused on the expansion of cleaner technologies in polluted cities as Santiago, Bogota or Mexico City, explained Sebastián Herreros, an economist for the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC).

Meanwhile, in the Chilean capital of Santiago, over 2,000 Chinese-made electric buses are already circulating.

“All our countries have to quickly head towards electromobility for a challenge of near survival and China is an ideal partner there: it has the scale of production and capacity to sell at affordable prices,” Herreros added.

– TIMES/AFP

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