Industry Trend Analysis - Oil And Interest Rates Key To 2018 Sales Recovery - JAN 2018

BMI View: In 2018, w e anticipate a sharp recovery in vehicle sales in Colombia as demand begins to reflect improving macroeconomic fundamentals in the country including accelerating GDP growth, falling interest rates and greater stability in the Colombian peso. We believe the negative shocks tha t lowered sales volumes in 2017 ( namely : the increase in VAT and the disruption to the truck registration system ) will have dissipated by 2018.

We believe that the Colombian economy is set for a return to stronger levels of GDP growth in 2018 and over the next five years, which will feed into stronger demand for new vehicles. After having adjusted their spending accordingly in 2017 following two negative autos industry demand shocks, we expect vehicle demand from consumers and businesses to once again begin to grow and reflect the general macroeconomic improvements in the Colombian market. Therefore, we forecast a 17.4% expansion in vehicle sales in 2018 but, while this appears to be fast growth, it is important to note the low base from which sales volumes are growing after three consecutive years of decline ( see chart below). Over the full forecast period sales growth will average 8.6%, reaching almost 325,000 units by 2021.

Sales Supported By Recovery In Macroeconomic Fundamentals

2018 Growth Accelerating After Three Year Dive
Colombia - Vehicle Sales Forecasts By Segment
e/f = BMI estimate/forecast. Source: ANDI, BMI

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