The auto parts sector in Colombia is a significant part of the productive chain of the nation’s automotive industry, the fourth largest in the region. It represents 6.2% of Colombia’s industrial GDP and has generated more than 25,000 highly skilled and well-paid direct jobs. Among the items manufactured in the auto parts sector in Colombia are:
- Batteries and wiring: Colombia had a few battery manufacturing companies that produced automotive batteries for various vehicles.
- Tires: Some tire manufacturers had established facilities in Colombia to produce tires for both passenger and commercial vehicles.
- Exhaust Systems: There were companies producing exhaust systems and components for vehicles.
- Seats and Interiors: Colombian manufacturers produce automotive seats and interior components.
- Filters: Some companies manufacture vehicles’ oil, air, and fuel filters.
- Electrical Components: Certain electronic and electrical components for vehicles were being produced in the country.
Other items manufactured in the auto parts sector in Colombia include suspension systems, steering systems, transmission systems, cooling systems, friction material, chemical products, lubricants and fuels, tempered, laminated, and armor glass, chassis frames, air conditioners, rubber and metal parts, and accessories, among others.
The automotive sector, including auto parts manufacturing, had been a target for foreign investment due to Colombia’s strategic location, trade agreements, and market potential within Latin America. International companies often invest in the country to take advantage of lower production costs, access regional markets, and benefit from Colombia’s efforts to foster a business-friendly environment.
Government actions are aimed at capturing investment for the auto parts sector in Colombia
Colombia’s government has been actively promoting foreign investment through incentives, tax breaks, and efforts to improve business efficiency. They have also sought to increase the automotive industry’s competitiveness, including the auto parts sector in Colombia.
According to Luis Ernesto Muñoz, a professor at the Universidad de los Andes, the Colombian industry is in an intermediate state, considering that one of the extremes is the development of the complete vehicle and another is vehicle importation. Based on the above, the industry has two significant markets: vehicle assembly and spare parts manufacturing and sales. These activities are concentrated in Bogotá, Cali and Medellín.
Although at the moment, one of the lines of a smaller scale in generating income in the auto parts sector in Colombia is the manufacture of components or systems with added value. The transition from an “assembly country” to a “manufacturing country” is one of the industry’s most critical challenges. Successfully making the transition could represent an increase in the degree of specialization of the auto parts sector in Colombia.
There are several major players in the Colombian automotive industry
According to the research carried out by Martín Arango Serna, an academic at the country’s National University, the companies that make up the auto parts sector in Colombia are:
- National and international suppliers that supply parts to manufacturers, assemblers, and distributors.
- Parts manufacturing companies that supply both assemblers and distributors.
- Assembly companies of light vehicles, trucks, buses, and motorcycles.
- The distribution companies, whose corporate purpose is the sale of auto parts.
- The freight carriers that move the parts between each of the groups mentioned above.
Colombia currently has eight vehicle assemblers installed and more than 300 companies dedicated to producing auto parts and bodywork. The goal for 2032 is to sell USD 5,129 million in vehicles and USD 5,558 million in auto parts. The vehicle sector in Colombia is recognized worldwide as a “leading edge” sector.
It is considered to be at the tip of the economic and social development spear due to its multiplier effects on a wide range of fields of industrial activity. Its high contributions to innovation and technology transfer make it one of the leading sectors and one of the locomotives for the development of Colombia
The vehicle assemblers with a presence in the country include:
- General Motors Colmotores (Isuzu, Volvo, and Chevrolet brands)
- SOFASA (Renault brand)
- Hino Motors Manufacturing SA (Hino brand – Toyota group)
- Non-Plus Ultra Bodies ( its brand, CKD Volkswagen)
- Auto Assembly Company (Nissan brand)
- Navitrans SA (Agrale brand)
- Daimler (Mercedes Benz brand)
Colombia has the largest vehicle spare parts distribution center in Latin America, with nearly 70,000 parts in stock and an investment of US$40 million in infrastructure and spare parts throughout the country to serve all brands of heavy-duty vehicles at different points of care.
The auto parts sector in Colombia has room for growth
The auto parts sector in Colombia has much room to develop further. Its continued growth depends on several factors. Among them are:
- Economic Growth: If Colombia’s economy continues to grow, it could lead to increased vehicle sales and demand for auto parts, benefiting the sector.
- Government Policies: Favorable government policies, such as incentives for the automotive industry or measures to attract foreign investment, could stimulate growth in the sector.
- Regional and Global Demand: Colombia’s auto parts industry might benefit from increased regional and global product demand, leading to more export opportunities.
- Technological Advancements: Embracing advanced manufacturing technologies and staying up to date with industry trends could enhance the competitiveness of Colombian auto parts manufacturers.
- Sustainability and Electric Vehicles: The global automotive industry is shifting towards sustainability and electric vehicles. Colombian auto parts manufacturers might need to adapt to these changes and invest in components and technologies related to electric mobility.
- Supply Chain Integration: Strengthening supply chain integration with original equipment manufacturers (OEMs) and global automotive companies could create new growth opportunities.
- Market Competition: The sector may face challenges from international competition, especially from countries with well-established auto parts industries.
- Infrastructure and Logistics: Improving transportation infrastructure and logistics could facilitate the movement of raw materials and finished products, reducing costs and increasing efficiency.