After two months of rumors, the Colombian government announced the new VAT scheme, under which some imported vehicles no longer attracted a 10% tax penalty.

The new rules made CBU cars cheaper because, for passenger cars with engines up to 1.4 litres and costing no more than $US30,000 FOB, VAT fell from 35% to 25%, the same as paid on locally assembled models.

January sales rose 52.1% year on year but fell 2.9% compared with December ’06. 18,698 vehicles were sold by assemblers (65.5%) and importers (34.5%) and GM led with 7,366 units sold for a 39.7% market share.

The Daewoo, Opel, Isuzu and Suzuki CKD assembler and CBU importer was followed by Renault (17.0%), Hyundai (9.8%), Mazda (5.1%) and Toyota (4.8%).

Best improving vehicle brands so far this year are: Daihatsu (272.0%), BMW (169.2%), Mazda (143.0%), Mitsubishi (97.9%) and KIA (97.4%). This group consists of four importers and one assembler and reflects their improved prices due to the VAT change.

Other reasons to explain the good start to the year include the government announcement of 5.8% GDP growth for last year and an expectation of more than 6% for 2007.

Vehicle prices are expected to keep falling because, under the automotive agreement between México and Colombia signed in 1994, there will be 5,000 Mexican-made units attracting just 6% in tariffs (regular tariffs are about 35%).

Juan Vargas