The passenger vehicle market in Latin America is projected to grow 4.3 percent in 2019 to 5.7 million new units, according to a study by Frost & Sullivan.
The consulting firm also concluded that new brands may be grabbing market share and that trade agreements may open the way to more growth.
Three of the biggest trends in the regional [passenger vehicle] market are the penetration of Chinese [original equipment manufacturers] with low-priced products, the potential opening up of Southern Common Market (Mercosur) and the restructuration of the United States-Canada-Mexico Agreement (USCMA), said Martin Singla, mobility industry analyst for the firm.
Mercosur is a customs union and trading bloc between primarily South American countries. Full members include Argentina and Brazil, associate countries include Chile, Colombia and Peru, with Mexico as an observer country. The blocs purpose is to promote free trade among its members.
USCMA, a trade deal which would replace the North American Free Trade Agreement between the United States, Canada and Mexico, incentivizes domestic production of passenger vehicles. The agreement has been signed by all three countries but is pending ratification.
The study chiefly surveyed the markets of Argentina, Brazil, Chile, Colombia, Mexico and Peru, though select data was extracted from the Uruguay, Ecuador, Paraguay and Costa Rica markets.
Argentina, Mexico and Chile respectively accounted for the highest motorization rate in the region. The study noted that a low motorization rate in Colombia and Peru marks the two countries as markets with potential for significant change.
Frost & Sullivan said automotive OEMs can create growth opportunities in three different ways. The first is to heavily invest in integrated mobility services – where various providers can offer their mobility services on a single platform – either through their own initiatives or partnering with consolidated players.
A second option is to compete in emerging sectors such as electric vehicles. Finally, OEMs can make themselves flexible enough to handle more stringent safety and security as well as structural design standards.
Automotive retailing and the aftermarket process are being disrupted by digitalization, online customization and customer-oriented tools, on-demand responsive services, and novel store formats, Singla added. It is crucial for players across the entire automotive value chain to embrace these transformations to ensure customer loyalty.