Chile - 2007

July 2007 | Industry Forecast

Attractive financing deals, in an environment of low interest rates, a strong local currency (against a weak dollar), and very competitive prices for vehicles aided demand for new vehicles in 2005 and early 2006. Moving forward, we expect 2006 to show another improvement in the fortunes of the country's autos industry, given improving economic prospects and a currency being bolstered by high global copper prices. Combined vehicle sales figures (passenger and commercial) for 2004 registered 148,586 units, a 24.3% increase when compared to 2003. In 2005 sales of passenger cars, LCVs and SUVs were 22.7% higher than 2004, suggesting that the recovery of the previous year is sustainable. As a base scenario, BMI believes that a 27% expansion across the remainder of the forecast period is possible, taking sales past 230,000 units by 2010. However, we envisage annual growth slowing to around 4% by 2010. For 2006, we predict total sales of CBUs to reach almost 195,000 units, a target we maintain going into Q406. Indeed, industry data shows that 107,455 units were sold during the period January-July, resulting in a daily average of 500 units. The pace of sales has led the head of Cavem, the automotive trade association, to predict total sales of between 195,000 units and 198,000 units for the year. The increasing strength in the US dollar against many Latin American currencies during May and June 2006 should not affect Chile as much as other countries in the region, due to its stronger economic fundamentals. However, should the dollar continue to rise in the second half of 2006, sales may be impacted in early 2007. Sales of used cars look set to increase as well - Cavem reports an 8.4% increase, with around 300,000 units sold in the year to July. We are predicting a 3.8% rise from the 520,000 units sold in 2005, to 540,000 units in 2006.

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