Editor's choice
22 mai 19

Car acquisition outlook for Colombia

Showing a 7.6% uptick in car sales last year to 256,052 units, Colombia’s automobile industry boasted one of the best performances throughout Latin America in 2018 thanks to its steady economy

 

While GDP was up 2.7% year-over-year, unemployment, inflation, and the national benchmark interest rate were 8.8%, 3.2%, and 4.25%, respectively, quite well in comparison to some of its neighboring countries.

 

However, what is the best way to acquire cars in Colombia? Outright Purchase, Finance Lease, Full-Service Leasing, or other. Here is a brief snapshot of each.

 

Outright Purchase, like many countries, is the most common option by individuals. It is not very common for large firms though, with the exception of pharmaceutical companies as it is seen as being more convenient for employees.

 

Colombia has approximately 18 banks and 17 financing companies, many of which who have special credit lines for car purchases, so this is one way to acquire cars if you don’t have all the cash up front.

The market has special entities such as GMAC and Finandina, as well as customized savings plans made exclusively for vehicles such as ChevyPlan (Chevrolet) or Plan Rombo (Renault) if needed. It is important to keep in mind, however, that consumer credit is usually the most expensive option to take.

Although less common, Finance Lease with an option to purchase is another way to acquire your vehicles. This option is more common with medium to large companies as it offers greater tax benefits.

During contracts which generally last 36-48 months, the title of the vehicle remains with the leasing company. At the end of the contract, the customer could take the purchase option and it will normally cost 10% of the initial value of the vehicle.


Renault Sandero, Colombia's best-selling car model in 2018 (source: Renault)

Full-Service Leasing, also known as Operational Leasing or simply called Renting in Colombia, is mainly used by companies seeking to reduce costs. This option generally lasts 1-5 years and is extendable to six or seven years.

Upon expiration, the customer returns the vehicles to begin a new rental cycle with new vehicles. The leasing company, which always retains the vehicle titles, then sells these used vehicles on the traditional market.  

Colombia is home to the fourth largest automobile fleet in Latin America, only behind Brazil, Mexico, and Argentina. There are approximately 13.3mn vehicles on roads, of which more than half (about 7mn) are motorcycles. As for the best-selling car brands in the country, they are Chevrolet, Renault, Nissan, Mazda, and Kia.

 

 

 

Authored by: Daniel Bland