Three new vehicle assembly plants are currently starting production in Colombia, writes just-auto's Bogota-based correspondent, Juan Vargas.

The assembly projects are small and based around niche models, requiring a relatively low capital investment.

Installed capacity is no larger than 5,000 units per year for any of the projects but the employment boost is significant and takes the Colombian auto industry in a new direction.

In Santander de Quilichao (a small town in the south of the country), a group of national and foreign investors has opened a small 'Worldstar' manufacturing facility.

The project provides employs 35 and has a capacity of just 300 units per year although it could eventually expand to 1,000.

These vehicles are made with state-of-the-art materials. For example, instead of steel for the frame, advanced fibreglass composites are used.

This assembly concept is based on low volume, with profitability reached with very few sales. Worldstar uses a franchise model that is farmed out to investors interested in installing car facilities. Part of the Worldstar Colombian car design is based on Yugo (the Yugoslavian maker of Fiat-based vehicles) technology, with some engineering development work undertaken in the USA.

In Colombia, the cars come with a dual-fuel gasoline and compressed natural gas system using CNG equipment imported from Italy.

Currently there are only two Worldstar franchises around the world (Colombia and the Philippines), but more than 10 are being signed up.

VR Engineering, an Italian brand of 'alternative' commercial vehicles, has established an assembly facility to manufacture four-wheel motorcycles with an installed capacity of 2.000 units per year.

The vehicles are low-cost utilities used for light delivery work and their 50 and 100 cc engines are made by Morini Franco, Rizzato and Lombardini, as is the steel frame and the body. The vehicles will be sold by a traditional dealer network.

The third project involves a group of Russian aeronautical engineers who have been visiting Colombia for the last 10 years to train local helicopter pilots. They have put some capital together and evaluated the opportunity to assemble four-wheel drive cars in Bogota.

"Because Colombia is a country with very limited economic resources and tough geography, people need cheap SUVs like the Bronto we represent here", said Sergei Babkine, the Russian project's director.

The Bronto is derived from a Russian Lada model and the venture is staffed by former Lada personnel.

In the next few weeks Autotat (the company's local name) will roll out the first 48 units from the factory in Bogota's northern suburbs.

This is the first stage of planned production of 600 units for the year although capacity can go up to 5,000.

If the Russian venture works, Renault may be tempted to sell Dacia's models in Colombia. In the first half of the 1990s, thousands of the Romanian cars were sold in Colombia where the critical price point is under $US10,000.

The Colombian automotive market is dominated by GM, which assembles locally and hold a 35 percent market share, followed by the Sofasa assembly factory (Renault and Toyota, 16 percent), the local Daewoo affiliate (12 percent), Mazda (11 percent), and the Hyundai importer (8 percent).

To view related research reports, please follow the links below:-

The Automotive Sectors of Latin America: Prospects to 2004

Automotive b2b - Strategic threats and opportunities in the automotive supply chain