2024-08-13 10:05:39
Car sales have plummeted by 32% in Manabí and 16% in Guayas so far in 2024. The wave of insecurity and violence is one of the factors.
Car sales in Ecuador have been falling so far in 2024, a trend that has been observed since July 2023.
The first half of 2024 closed with a decrease in sales of almost 19% nationwide compared to the same period last year. However, the biggest decline is in the border provinces, as well as in coastal provinces such as Guayas, Manabí and El Oro, where there are higher rates of insecurity.
Where were fewer cars sold?
In Carchi and Sucumbíos, provinces located on the northern border of Ecuador, sales have fallen the most so far in 2024, according to data from the Association of Automotive Companies of Ecuador (Aeade). Between January and June 2024, in Sucumbíos, which is one of the provinces with the highest oil production, dealerships only sold 56 cars; this is almost half compared to the 99 cars that were sold in that area in the first half of 2023.
Something similar is happening on the southern border of Ecuador, in El Oro. In this coastal town, car dealerships sold 549 units in the first six months of 2024. This means a 36% drop compared to the same period in 2023, when 857 cars were sold.
El Oro has been experiencing a decline in the share of national sales since 2022. In that year, 1.3% of the cars sold were in El Oro, but now it is 0.9%. El Oro is among the seven provinces in which the Government declared a state of emergency on July 2, 2024. This province includes Pasaje, a canton that has seen an increase in violence this year. For this reason, on July 10, 2024, the Security Council of this canton asked the Government to declare the city in a state of emergency.
The large provinces are also in red
But it is not an isolated phenomenon. Thus, in Pichincha, which is the province with the highest percentage of sales in Ecuador (42%), dealerships sold 23,839 cars; that is, 4,682 fewer units than in the first half of 2023. This reduction in sales represents a drop of 16%.
This drop in car sales in Pichincha represents a change in trend, since until 2023 it was among the five provinces where sales increased. Historically, Guayas is the second province with the most car sales in the country.
But so far in 2024, in this coastal province, which is one of the most affected by the wave of insecurity, vehicle sales have contracted by 16%. A drop that adds to the 4% drop in sales in 2023.
Durán, located in this province, is in fact one of the cities with the highest rates of violence in Ecuador. That is why President Daniel Noboa announced on July 11 that he will base police and military personnel in that city as a strategy to deal with the wave of violence.
And in Manabí, another coastal province with high levels of insecurity and violence, vehicle sales fell by 31%. Manabí is in the top 5 of the provinces with the most sales nationwide.
In June 2024, the Government also ordered the temporary transfer of the military and police leadership to Manabí, due to the insecurity crisis in that town.
What factors are affecting car sales?
The lack of liquidity in citizens’ pockets due to the slowdown in the economy is what has most harmed the automotive sector this year, says Esteban Acosta, former president of the Association of Automotive Companies of Ecuador and manager at Suzuki.
Acosta explains that, in fact, the drop in sales until June is above what companies expected.
In fact, Orgu’s strategy this year to sustain its sales has been to make new investments in cities where there are fewer security problems, adds Yánez. In July 2024, the company made a USD 2 million investment to open two new Ford brand stores, one in the north of Quito and another in Tumbaco.
This is the first time that this company has opened stores in Quito. Orgu has been representing Ford in Ecuador for almost 50 years, but only operated in Guayas, Manabí and El Oro. “We will only bring in new models for the remainder of 2024 and will create around 120 jobs.
“We are taking the risk and it is an important investment that is in line with what our clients are looking for, which is quality and technology,” says Yánez. The strategy for the remainder of 2024 will be to reduce vehicle inventories, because the increase in taxes prevents price reductions, says Acosta. In addition, fewer purchases are expected in the second quarter of 2024, because the 2025 elections are approaching. “It is very likely that the purchase decision will also be delayed due to uncertainty,” adds Acosta.
By: PRIMICIAS