Peru Autos Report 2007

The absence of any significant investment by industry majors in Peru's automotive market sees Business Monitor International (BMI) reiterate its forecasts for the sector in the Peru Automotives Report for Q406. The trend of positive growth for the sector has continued during the second half of the year, with Peruvians buying more new vehicles on the back of increased consumer confidence and greater purchasing power. In fact, industry data shows that Peru boasts Latin America's fastest growth rate in the new car market.

The Peruvian automobile industry association Araper reported a 42% increase in new car sales for the period January - July 2006. According to Araper, in the first seven months of the year new car sales totalled 17,573 units. Sales relating to station wagons, vans, multipurpose vehicles (MPVs) and sports utility vehicles (SUVs) rose by 41%, while sales of commercial vehicles including pick-up trucks and vans were up by 32%. Heavy vehicle sales soared by 75%. In July alone, some 2,794 new vehicles were sold. Toyota continues to enjoy a stranglehold on the market. In the period January-September the carmaker's sales exceeded 6,000 units, while its market share rose to 30.8%. A bullish Toyota has set itself the target of more than 8,000 units for 2006. BMI is forecasting total vehicle sales of 71,265 units for 2006, rising to 82,170 units by 2010.

The current strength of new car sales in the Peruvian market against the traditional weight of used imported vehicles has led Dai Ichi Motors, one of the biggest importers of used vehicles in the country, to predict that new vehicle sales will surpass sales of imported vehicles this year. According to Dai Ichi, new vehicle sales could account for 60% of the market, while used imports will account for 40%. In terms of industry developments, an interesting scene for future competition has been set with the arrival of four Chinese automotive brands on the Peruvian market. In November, the brands Great Wall, Hafei, Geely and FAW commenced their foray into the market via local distributor Zona Motors. The brands are expected to preserve features that reflect the cars' origins, leading Zona Motors to believe that they will change the face of the sector. Zona Motors is eyeing more than 3% of the market in 2006, rising to 5% by the end of 2007.

The interest of the Chinese brands in Peru is in line with BMI's Business Environment Ranking for the country, which sees Peru retain first place. Vehicle ownership is below average for the region, suggesting there is still room for growth in the market.