Colombian market, next step on Fiat LATAM plans

Fiat Latin America has become one of most dynamic divisions of the group. The continent was along with North America, the big two regions to increase revenues in the third quarter of 2012, according to the latest report. Most of Latinamerican economies keep growing no matter the turbulence in developed world. Its young population grows as middle class becomes the largest one in countries like Brazil, Argentina, Uruguay and Chile. Other countries, like Mexico or Colombia, deal with their own problems but their economies show that sustained growth is possible. Fiat-Chrysler is one of top 3 carmakers of the region as it is the leader in Brazil and one of top 5 in Argentina and Mexico, the largest car markets in Latin America. Their continuous investments in those countries (a second Brazilian plant is expected for 2014) and the development of products exclusively for them, allowed Fiat, in Brazil and Argentina, and Chrysler, in Mexico, to gain an interesting market share. The three markets counted for 80% of total region’s car sales and they are expected to keep growing in the next years as most of their population doesn’t have a car yet, according to new-cars-sold/1000 inhabitants index. Last year’s figures shows that Argentina was the country with the highest index with 20.3 new cars/1000 inhabitants. That result is really far from developed markets like USA with 40.7 or Europe 36.2 new cars/1000 inhabitants. Brazil occupied third position (17.7) and Mexico is in place number 8*. It shows not only how low car sales numbers are compared to total population but also the enormous potential the whole region has in coming years.

But the region is not only Brazil, Argentina and Mexico. There are other markets that may be small now but can become really attractive in the future as they have big populations and stable economies. Colombia is a good example. It is Latinamerica’s third largest populated country (47 million inhabitants) and a fast and stable economy that seems to keep attracting foreign investment. The strategic location of this country, just in the middle of the Americas with two shores in Atlantic and Pacific oceans, makes of it an ideal place for making business. It is a country with so many problems but it is also full of opportunities: a small but rising middle class that will be enlarged thanks to better economic and political conditions. Besides, it has become ‘the other Chile’ in terms of free trade agreements and an open economy. Last governments have signed several trade agreements with lots of countries allowing Colombian market to receive goods and services with less import taxes and at the same time to export its products to countries like Mexico, South Korea, Canada, USA, Chile, Peru, Turkey and Russia. Now it is easier to import cars in Colombia and much easier for Colombians to buy them as prices decreased thanks to lower taxes and a stable currency exchange. Last year a record of 325.000 cars were sold there, more than Swedish, Swiss or Polish markets and close to Austrian one. However, it was the region’s fifth largest market no matter it is the third largest population. ALADDA index shows that Colombia occupies 9th place with only 7 new vehicles/1000 inhabitants, which explains how big the market can be in coming years. It is why it could be considered as one of the most competitive ones (along with Chile): not only the traditional car makers from Europe, Japan/Korea and American brands are present but also Chinese and Indian have an important role.

Fiat sells its cars through an important distributor (Colitalia Autos S.A.) with several dealerships all over the country. Thanks to their long experience with the brand in Venezuela, they are now investing a lot in Colombian market as they see it as a great opportunity. As I’ve been saying, Fiat can not depend on only one or two markets in a region full of opportunities. It can’t do the same what happened in Europe with Italy, where its strong dependence affects its operations in that continent. What Fiat guys from Colombia are doing is a good example of diversification of sales and pointing at an interesting market that can become important for global Fiat-Chrysler. A proof of their commitment with Colombian market is what they just did in Colombia’s largest auto show, the XIII Salon Internacional del Automovil of Bogotá. The event, that takes place from November 14th to 24th, is an interesting show of what all car makers with operations in Colombia can do. No matter there are other more important auto shows in the region in terms of public media and presentations, Bogota’s event has become the place for big business and unexpected presentations. One of it was the first presentation of Fiat 500L in the Americas. For the first time the new B-MPV from Fiat crossed the Atlantic ocean for its first official appearance in Colombia. It was all possible thanks to Colitalia’s effort to make of Fiat’s stand one of the best of the show. Along with highly innovative interactive technologies and design, Fiat’s show included the very first appearance of the new Panda in South America, and the introduction of the new Grand Siena, coming from Brazil. In terms of quality of the presentation, Bogota’s stand is not far from what we normally see in Geneva or Sao Paulo. Of course, the 500L and Panda are just Show cars looking to increase Colombians’ awareness.

The importance that Fiat and its local representative gives to Colombian market is not only a matter of a show. Next week it is expected the visit of important Fiat LATAM executives and the plans for coming months are full of launches. In 2013 they will introduce the Serbian 500L just after Fiat does it in USA. Then the new Palio and Siena will make their debut to compete in the tough Colombian ‘B-Segment’. Meanwhile they keep selling the Mexican 500, which has become really popular in Colombia thanks to its attractive mix of price-product. Colitalia will also introduce the Abarth 500. For the entry-level, they are negotiating a product that could have a very competitive price (around $12.000 or 9.500 euro) but nothing is for sure yet. Their idea is to offer different products for each segment so they can gain more market share. According to confidential sources all these future products will allow Fiat to achieve its forecast for next year: 3.000 units or 1% of the market. It means 43% more than 2012 forecast, which will be boosted by 320 units expected to be sold in Bogota’s auto show. Thanks to a responsible work, strong commitment and several marketing strategies, such as social networks contests, the brand will be able to achieve a better market share and awareness among Colombians and at the same time look to expand Fiat’s domination in this important region. Good for that.

*ALADDA index, Asociación Latinoamericana de Distribuidores de Automotores