Sao Paulo based Jaime Ardila, head of GM’s South American division has offered Colombia an investment of US$200m in its local production unit, and to develop the local supply chain, in return for continued protectionism of the CKD assembly industry.
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According to local media reports, he urged the country’s president to “handle with care the free trade agreements to come” in a direct comment on one the Colombian government is now negotiating with Korea.
Ardila said “the GM plan was to convert Colombia into a mid-size automotive power in order to export vehicles to México and Latin America, including Brazil”.
Colombian importers representative Oliverio García told just-auto: “I agree with the idea to rethink the development agenda of the national automotive industry through opening the Colombian market because the current CKD business model has only been successful for the assemblers and the country has achieved very little in return, in terms of employment, technological development and foreign exchange.
“In fact, Colombia never had an export vehicle programme because the assemblers did not want to make the necessary investments during the long years they enjoyed pure protectionism that turned the industry into a cartel, while countries like Mexico, Argentina and Brazil were able to develop their local industries at the right time.
“The only thing Colombia has achieved with protectionist policies is a very low rate of industry employment and poor access to the automotive market due to high costs, which exacerbated the inefficiency of both the automotive and transportation sectors in Colombia.
“Protectionism has been a very lucrative business for assemblers with its CKD programme but assembly plants in Colombia now have to compete with free trade agreements, so their competitiveness must be through their own investments and not by over-regulation or more protectionism.
“Today, local assemblers have the benefit of importing CKD kits tax-free while CBU vehicles pay the highest tariff of any industry (35%). The least you would expect from the assemblers in return for this generous benefit is that the companies include in their global portfolios vehicles assembled in Colombia and use Colombian parts on production lines in other countries,” said García.
Sources told just-auto that the Programme of Productive Transformation, addressed to the Industry Ministry, wants assemblers to become a “world class industry” and is encouraging them to lead Colombian industry development.
