In a region marked by disappointing economic development over the past years, Chile has been a ray of light. High demand for its resources exports made it one of the better economies in South America. Lately though, the economic development has been lagging and the slowdown in China is particularly hurting the growth rates. Nevertheless, the outlook is improving, making Chile an important destination in South America.
“We’ve seen a big increase in imports to Chile, particularly automobiles, auto parts and heavy machinery,” says Juan Ignacio Miquelarena, Commerical Manager, Broom, WWL’s commercial agent in Chile.
“Even during the downturn, imports remained steady and for some of our customers even increased, so as the economy picks up, we expect imports to surge.”
In 2014, approximately 320,000 light vehicles were sold in Chile, an increase of 100,000 compared with just five years ago. By 2020, unit sales are expected to grow to 400,000 annually. Since Chile lacks a sizable local automotive manufacturing industry, the majority of these vehicles need to be imported from Europe, Asia and North America.
Around 70 per cent of light vehicles are imported from Asia. However, imports from North America are expected to double in the coming years, while imports from Europe are also likely to increase. The largest segment is small/compact vehicles, although as the economy continues to grow, more and more customers are shifting to SUVs. This segment is expected to grow by 18 per cent in the next six years.
The other key driving forced behind economic growth is the mining industry, with many major mining companies investing heavily in their Chilean operations. Copper exports alone account for 20 per cent of Chile’s GDP and 60 per cent of exports. This in turn has driven increased imports of machinery and mining equipment.
Last May, to better meet the growing customer demands from Chile, WWL expanded it’s ocean network to include a monthly stop in San Antonio – one of the biggest and busiest ports on the west coast of South America. The new route also includes stops at the ports of Cartagena, Columbia, Manzanillo, Mexico, Guayaquil, Ecuador, and Callao and Angamos in Peru. Furthermore, the new route offers better connections between Chile and Europe and North America.
The need to expand to Chile was driven by growing demand from WWL’s customers in Chile, most notably auto importers Derco and SK Berge. Derco is one of biggest car importers in the region, with outlets in Chile, Bolivia, Peru and Colombia. Currently they represent over 60 automotive brands including Suzuki, Mazda and Renault, and in 2007 became the first company to import Chinese brands into Chile. They also import heavy machinery, construction equipment and heavy-duty trucks.
SK Berge has also seen its operations expand as the demand for imported cars increases. Today they have over 200 retail outlets in South America including 90 in Chile alone, and represent popular automotive brands such as Ferrari, Alfa Romeo, Fiat, Jeep, Mitsubishi, Tata, Kia, Chrysler and Volvo.
The Chilean economy is one of the most prosperous and stable in Latin America, and to date has proven resistant to the downturn affecting the rest of the region. A highly competitive and open market, with a high degree of economic freedom and low instances of corruption, has helped create the perception of Chile as a safe and easy place to do business.
Car sales in Chile
2020 (projections): 400,000