New vehicle Sales grew 18% in Guatemala and these were the most Popular

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By LatAm Reports Editor

After a drastic drop in demand for motorists in 2020 (first year of the pandemic) there was a high recovery in 2021 and 2022, which continued last year.

Last year 54,711 vehicles were sold in Guatemala, which was 18% more than in 2022, or about 1,981 more, said Jean Pierre Devaux, director of the Association of Importers and Distributors of Motor Vehicles (Aidva).

In 2022 growth was 20.3%, and the positive trend continues and the figure of 2023 is not seen as a loss of dynamism, but as the stabilization of the market, the executive said, taking into account that after falling -7,64% in 2020, the first year of the pandemic, in the following years it has recorded sharp increases.

The most demanded are the picops, since of the total mentioned, 1 7 thousand 364 corresponded to this type, although they are not necessarily used for cargo transport. They are followed by the SUVs with 17 thousand 17., while trucks totaled 8,992 units.

In the case of sedan-type cars they tend to fall, as in 2023 only 1 thousand 986, were sold and of the compact cars or hatchbacks there were 3, 251, according to Devaux, who explains that most buyers are opting for the SUVs of different brands and types. This would be due to people’s preference for a more robust and comfortable van, even if they are of the same high or long dimensions, the executive said, mentioning the trends.

Demand and growth have stabilized and are more in proportion to the good economy in the country, he added.

The panorama of used cars

Nelson Escalante, president of the Federation of Importers, Vendors, Managers and Transporters of Guatemala, comments on the situation of the used cars market.

The 2023 was not very good, as there was a sales drop of approximately 38% compared to other years. It was a year away with high inflation, there was political uncertainty and a lot of expectation of what could happen, and people postponed purchases and decisions. Along with that, many vehicle importers decided to migrate in search of better jobs.

In 2024, sales will depend a lot on what this government does and also the elections in the United States, he added.

Another problem that could affect is how much demand electric cars can have, which by law have tax exemptions for several years.

In addition, after large auto factories halted production mainly in 2020, the price of used cars began to rise due to higher demand. However, although they have already fallen from 2021 and 2022, it has not been possible to return to 2019 prices in the United States, and in Guatemala it could not be increased to those levels because many people do not pay them, he added.

Faced with this scenario, people began looking for less sophisticated vehicles and brands not as used before in the country, as well-functioning market alternatives, he explained.

Import figures

With regard to vehicle import figures, the Superintendency of Tax Administration (SAT) handles two classifications:

One is the import of vehicles as a data from foreign trade, in which motorcycles are excluded, so in 2023 29,797 new vehicles and 64,864 used were imported for a total of 94,41, representing casualties of between 47 and 49% compared to the previous year.

Devaux said that these data do not coincide with those in the sector and have requested to review it. Meanwhile, Escalante says they do reflect according to what they have experienced this year.

The other data handled by the SAT is on the tax basis, collection and quantity of imported vehicles subject to the payment of the First Enrollment Tax (Iprima). This includes motorcycles, so the total is 417,156 new units in 2023 and the used ones were 145 thousand 733, for a total of 562 thousand 889. In this case, growth of between 12 and 13% is reflected.

Financing

Among bank credits to the private sector during 2023, the balance of those for consumption grew by 23.8% and within this segment, vehicle financing ranks second, and that of vehicles for personal use grew 27.6%. The balance increase was Q1 438 million, reaching Q6.647.1 million.

Meanwhile, the growth of the balance of consumption with credit cards occupies the first place in this segment with 37.6%, as it rose Q8 billion 352.8 million to Q30.570 million, while the purchase of real estate increased by 18.6% and is the third balance subtracted.

Asked Devaux about increasing this type of bank financing, he said it is striking that it has grown so much because Aidva’s partners, who have 99% of the car market, provide own financing with soft loans and up to 96 months to pay. They self-finance with capital from the same company.

Escalante mentioned that for financing in the used car segment, work has been done with several tools, but one that has gained a lot of strength is to finance the cars through credit cards with deadlines of 12, 18, 24 and up to 48 payments.

Sometimes, the amounts exceed the maximum limit a card provides but what they have done to cover the expense is use two or three cards, he added. That modality has risen from 25% to 30%,” he said.

Expectations

The new car sector is very optimistic and believes that after uncertainty due to the change of government, businesses that had been postponed can be revived and according to Devaux, growth is expected to be similar to 2023, from 15 to 18%.

The pandemic had the effect of the pandemic in 2020 and 2021 and 2022 the economy recovered, so the 18% increase can be similar in 2024, he added.

For this year, Escalante said that the waters of political instability have already fallen, but it depends on the actions that the government is going to promote and that the economy is normalizing and investing again. Another positive expectation they observe is that universities start their face-to-face classes more normally and many students are going to demand vehicles to move.

This article has been translated from the original which first appeared in Prensa Libre