Last modification: 11 Nov 22

Well known for its Panama Canal, the entire canal and the area supporting it - including remaining US military bases - were transferred to Panama by the end of 1999. Thereafter, from 2007-2016, a major expansion project to more than doubled the Canal's capacity was carried out, allowing for significantly more Canal transit for larger ships. 

The country's dollar-based economy is mainly supported by the services sector which accounts for nearly 80% of GDP. Among the key services in the country are those related to operating the Panama Canal, logistics, banking, the Colon Free Trade Zone, insurance, container ports, flagship registry, and tourism.  Panama is also a center for offshore banking.

However, despite the growth and success of the Canal, the resulting economic performance has not translated into evenly distributed prosperity. Panama has the second worst income distribution in Latin America.


Chapter 1: Economic and business environment


population 4.38 million (2021)

source: Worldometers


Panama City (population 408,168)

Major cities

1. Panama City (408,168)
2. San Miguelito (321,501)
3. Juan Díaz (100,636)
4. David (81,957)
5. Arraiján (76,815)


Spanish (official)


US$63.6 billion (2021), up 20% year-over-year
US$14,520 per capita

source: World Bank

While the average GDP in Latin America is expected to be up 5.9% in 2021, a 5.5% uptick is forecasted for Central America driven strongly by Panama (up 12%). Neighboring countries such as Guatemala and Costa Rica are forecasted to be up 4.6% and 3.7% respectively. (source: Cepal)


Unemployment rate

14.5% (2021)

source: Trading Economics

Main industries

construction, brewing, cement and other construction materials, sugar milling


US dollar

Interest rate

1.3% (2021)

Source: Trading Economics

Fleet Maturity Index (scaling)

Approximately 67% of multinational companies in Panama offer company's cars to some of their employees.

Political key info

Laurentino Cortizo has been the president as of July 1, 2019.



1.8% (2021)

source: Trading Economics

Chapter 2 : Automotive market, segments & sales

Total Car park

1.22 million vehicles, approximately one vehicle per three inhabitants.
(including passenger cars, trucks, motorcycles, etc.)  

According to
the report “Vehicular Fleet in Panama 2015” prepared by the Business Intelligence Unit of local research company Central America Data, 251,000 vehicles in 2015 were six years old or less and 270,000 were 7-15 years old. Meanwhile, four out of every 10 were sedans or coupes, while 25% were SUVs.

Regarding commercial vheicles, 14% were light commercial vehicles (LCV) and 5.5% heavy long-haul trucks. 

Top 5 brands (total market)

1. Toyota (approx. 22% of the market)
2. Hyundai (approx. 18% of the market)
3. Kia (approx. 16% of the market)
4. Nissan (approx. 11% of the market)
5. Suzuki (approx. 8% of the market)

Dealer network (including fleet dealer network)

Panama has more than 50 car brands.

Used car market/renewal cycle

As used car imports are allowed, there are numerous car models in the country.

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales

Panama is among the countries with the lowest OEM corporate fleet operations in Latin America. Others include Nicaragua and Venezuela.

Approximately 68% of the multinational companies in Panama offer company cars or vehicle benefits for employees, according to a 2020 Global Fleet study done in partnership with Willis Towers Watson.

Evolution fleet sales (last 5 years)

In 2019, commercial vehicles sales fell 13% to 7,851 units from 8,995 (source: OICA)
2018: 8,995 units
017: 10,759 units
2016: 11,500 units
2015: 9,600 units

Chapter 4: Taxation & legislation


In terms of vehicle imports, in order to ensure that the car is not stolen, the local police will have to inspect the car and issue a Certificate “that the car has not been stolen”.   Then the Police will send the papers to “a Municipio”, and once the papers are received at the Municipio, the car can be registered in the owner’s name. In Panama City, at the Municipio of Panama is where the “Registro Unico de Propiedad Vehicular” will be issued.  The Placa has to be paid and then the car can be collected.

When vehicle are sold, unless it is sold to another individual who is eligible for duty free importation of a vehicle, they must pay the exempted duty before transferring title of the vehicle.

Chapter 5: Car policies

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Chapter 6: Funding methods

Leasing is not as common in Panama as it is in other countries like the United States. Although it is generally used by companies, it is also used by individuals who fully declare their income. For both companies and individuals, one of the immediate benefits of leasing as opposed to traditional bank loans is that it is 100% tax deductible. Moreover, leasing is exempt from the 1% special interest compensation fund which is charged on all loands of more than US$5,000.

In terms of financing, up to 90% can be finananced with terms of up to 84 months (7 years).  Funding can be available upon short notice as slong as all requirements have been reached. Once credit is approved, a promisory note is presented to the car dealer, and payments are commonly done through a debit or savings account. The car must be covered by a car and insurance through a policy approved by the bank. 

Chapter 7: Fuel

November 7, 2022
Average gasoline price per liter: US$1.14 (world average is US$1.31)
Average diesel price per liter: US$1.22 (world average is US$1.32)

March 1, 2022
Average electricity price per kWh Households: US$0.17 (world average is US$0.14)
Average electricity price per kWh Business: US$0.19 (world average is US$0.14) 


Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics


As of 2017, Panama has had mandatory 3rd-party basic liability insurance for traffic accidents to cover the  damage to property and personal injury. Such policies generally include roadside assistance, medical payments, and some provide legal services as well. 

Two types of Panama car insurance packages are available on top of the basic liability insurance, being Collision and Comprehensive insurance. Collision only provides coverage for accidents having injuries or death.  Comprehensive offers more coverage than basic insurance by covering damage to the car or replacement cost if it is stolen and pays the cost for the other vehicle’s damage if you are at fault.

Not every Panamian vehicle insurance company insures foreigner’s cars.  Those that do, however, require a copy of the foreigner’s passport, driver’s license and foreign title & registration.  Comprehensive insurance will require the car to be inspected with photos and a verification of kilometers. 

Panama insurance premiums are based on the Panama driving record (foreigners generally will have a clean driving record in Panama).  Premiums will increase in the case of an accident where the policy holder is at fault. If the policy holder maintains a clean driving record the premium can be negotiated when it is time to renew the policy.

In the case of an accident, Panama law requires cars to be removed from the accident spot to allow the traffic to flow freely.  However, drivers tend to keep their cars where the accident occured until a traffic policeman or insurance company representative arrives.  Panama car insurance companies tend to arrive at the accident scene faster than the police do and can assist with filling out the accident forms and take photos of the scene.

An official Panama Accident Report Form must be kept in the car at all times, and when an accident occurs, the form must be provided to a Panama car insurance agent at the accident scene.  If the police show up first, the accident report can also be filled out then. The report describes the accident and any damages.

















Chapter 10: Environment

In an effort to drastically scale back vehicle emissions across Panama, national and local governments together with the private sector have launched a process to implement a National Electric Mobility Strategy.

Kicked off in 2018, the project is supported by U
N Environment and funded by the flagship climate program of the EU in Latin America, Euroclima +.  According to the UN Environment, if all buses and taxis in Panama City were electrified, the country could save approximately US$500 million in fuel by 2030 and avoid the emission of 8.5 million tons of carbon dioxide equivalent.

Meanwhile, with public and private sector support, the country sees 25-50% of public transport and 10-20% of private transport being electrified by 2030. EVs are also seen representing 25-40% of total private vehicles sales in the country by 2030.

Chapter 11: Mobility

Panama City, with some 885,000 people, faces 30% more commute time than the LatAm average, according to the Latin American development bank CAF. While home-to-work travel takes 40 minutes on average in Latin America, those in Panama City take about 52 minutes.

Residents in the city are also the second most dissatisfied commuters in Latin America (34% unhappy), only behind Bogota.

While Panama City residents using private transport such as a car take 56 minutes on average, those using public transportation take around 67 minutes. The problem, according to a study carried out by the bank, is displacement.

There are pockets of dense urban areas which are being served by public transport systems with winding routes which are not efficient.

While a home-to-work commute averages 17km in Panama City (taking up to 85 minutes), commutes in larger cities such as Bogota with 9mn people and Santiago do Chile with 7mn people are approximately 11km (taking about 50 minutes).

Chapter 12: Key trends to watch