Dependence on foreign investments through the pandemic
Automobile production in Colombia was greatly affected by the pandemic: In 2020, their annual motor vehicle production fell to under 43,400 units, a drop of over a third from the 2019 production volume. Nevertheless, the country established itself as a regional manufacturing market for major companies such as General Motors and Renault. These two companies have dominated the Colombian market, in both vehicle sales and production. To boost foreign investment in the industry even further, the government has focused on the development of industrial parks and free trade zones. However, and perhaps as a result, the South American nation still relies heavily on external sources to meet its demand, with the value of automotive imports far exceeding that of exports. While the Colombian automotive market is ripe for foreign investments, it has also been deeply impacted by the volatility of exchange rates. The economic instability created by the pandemic led to a devaluation of the Colombian peso in 2020, and the industry also has had to contend with the global automotive semiconductor shortage, which has depleted the vehicle stocks of exporting countries. In February 2022, Renault, the most popular brand in Colombia as of 2021, projected the shortage would lead to production cuts of around 300,000 vehicles in 2022.Electric vehicles on the rise
While new vehicle sales in Colombia were hit head-on by the coronavirus crisis, electric and hybrid vehicles seem to have prevailed in 2020. However, the boom of electric vehicle sales was most felt in 2021, as the sector slowly recovered. That year, over 17,700 of these vehicles were registered in Colombia. This is nearly triple the figure reported in the previous year and represents over seven percent of new vehicle sales in the country. At the forefront of this trend is Japanese multinational car company Toyota, holding a share of nearly 40 percent of the Colombian electric vehicle market. This advance in electric vehicle sales has been largely a result of the elimination of import tariffs established by the government in December 2019—part of a series of measures aimed at reaching the Paris Agreement emission goals. With the decree in effect until 2027, this trend is likely to further gain ground in the coming years. Propelled by governmental incentives, the electric vehicle market in South America is tipped to grow to around 2.4 billion U.S. dollars in 2026, in line with a global shift to sustainable mobility.
