The automotive sector speaks out on the withdrawal of subsidies to extra and ecopaís – La Nación

2024-10-08 14:25:25

During the first five months of 2024, 9,583 fewer vehicles were sold than the same period in 2023.

The vehicle marketing is going through a complex period in Ecuador. sales decreased by 16.5% during the first five months of 2024 in relation to the same period of 2023.

Between January and May 2024, 48,498 vehicles were sold, which was 9,583 less than in those same months of 2023.

And the prospects are not the best. However, representatives of the two main unions in the sector agree that it is preferable for subsidies to be withdrawn. extra gasoline and ecocountry to continue reforms to finance the General State Budget.

Genaro Baldeon is president of the Association of Automotive Companies of Ecuador (Aeade). According to him, this subsidy is a unsustainable load for the limited resources available to the State Ecuadorian.

Although the increase in the prices of extra and ecocountry will have an impact on economic activities such as automotive markets, “it is more serious that companies and citizens are exposed to the permanent and constant reforms that the Government must carry out,” said Baldeón.

The Ecuadorian automotive industry

The executive director of the Chamber of the Ecuadorian Automotive Industry (Cinae), David Molinasaid that subsidies must be analyzed above any sectoral issue, because fuel prices must be honest.

“It is such an inefficient subsidy that it affects the fiscal coffers and that they end up charging us with other taxes,” he says. Molina.

For him, the Government You should also consider that after eliminating this subsidy, it is necessary boost the productive activity eliminating taxes that generate distortion.

Molina says that after the elimination of subsidies to extra and ecocountry demand may increase diesel and hybrid vehicles.

The effects of the reforms in Ecuador

According to Baldeonthese changes affect investments and reduce employment opportunities in Ecuador. In addition, they impact the consumption of goods and services. “A fiscal disorder is more harmful than any increase in fuel prices.”

Proof of this, he says Baldeonis the impact generated by the latest tax reform with the increase of IVAwhich went from 12% to 15%, in April 2024. It is one of the main causes why sales in the automotive sector do not recover.

Baldeon says that, currently, they are going through a contraction of the automotive marketor. According to him, Ecuador They are already experiencing a time of economic contraction and lack of liquidity, which affects the consumer purchasing decisions. “A contraction in the market has repercussions throughout the chain linked to automotive trade. We are linked from maritime and land transportation to advertising, the financial sector and insurance,” he explains. Baldeon.

By: THE TRADE