Investments on the Andean Region (Medellín, Lima, Santiago de Chile): Opportunities for the sustainable automotive industry

Investments on the Andean Region (Medellín, Lima, Santiago de Chile): Opportunities for the sustainable automotive industry

How economically relevant is the automotive sector? 

The automotive industry is characterized for being a fundamental sector in the economic and social development around the world. Its market share is extremely relevant due to the number of jobs it generates and the percentage of GDP it represents globally. It also has a positive impact on people’s quality of life on a daily basis, facilitating and improving their mobility, clearly when accompanied by effective public policies.  

In recent years, we have seen how environmental activism and resource preservation have gained momentum. Companies have had to adapt to these demands and make decisions to move their products and services towards a more circular and sustainable economy. The automotive industry has not been left behind. Demand, as well as supply, for the sustainable scope of this sector has been growing exponentially. For example, according to the World Economic Forum (Woody, 2022) sales of electric cars have reached 6.6 million USD in 2021, which is almost double the 2020 figures. It is imperative that decision makers make this leap and pursue the development of initiatives that satisfy people’s need for transportation, while aligning with the social and environmental values of the new generations. 

How relevant is the automotive sector in Latin America? 

Latin America has countries that are among the top 10 vehicle producers in the world, such as Mexico and Brazil. However, in several countries, such as Colombia, Chile and Peru, there is a market that has not yet begun to be exploited and that has potential, especially in terms of sustainability. This is either through investment in the installation of automotive production plants or in the import of intermediate or final products. The governments of these three countries have already begun to acquire future plans for the efficient integration of electric, public and private transportation, which will facilitate the insertion of this sector into their economies in a reliable manner.  

Medellín and the sustainable automotive sector 

Medellín is one of Colombia’s main cities. It is characterized by its commitment to innovation and technology. Medellín already has its own electric public transportation system, the metro, the first and only one of its kind in the country. In addition, several other electric transport lines support the reach of the metro in the city, such as buses, the tramway and cable cars.  

Colombia has shown great commitment to the goal of zero emissions. That is why the Ministry of Mines and Energy has arranged different initiatives to attract citizens and investors to the sustainable automotive sector. Among these initiatives are: discounts on import and use taxes, insurance and other fees; preferential access to parking in different cities; and increasing public electric fleets to reach 30% of the total fleet by 2025 (Decarbonising Colombia’s Transport Sector, 2021). 

Santiago and the sustainable automotive sector 

Chile has been characterized as an economy with stable and continuous growth for more than a decade. It is one of the strongest markets in Latin America, attracting constant foreign investment. For its part, the Chilean government has demonstrated a high degree of commitment to the transformation of the country’s transportation and its migration towards the sustainable sector. The government’s goal is that by 2035, 100% of vehicles purchased (light, medium and public) will be zero-emission (Mariluz, 2019). 

At the moment, Santiago has the largest fleet of electric buses for public transport after China (Mariluz, 2019). All this shows the big bet of the city with the sustainable automotive sector.  

Lima and the sustainable automotive sector 

Lima, the Peruvian capital, has proven to be a solid and growing economy in Latin America, according to its macroeconomic indicators. It has also played an important role in the sustainable development of the country, which aims to achieve a 30% reduction in emissions by 2030. They currently have an electric subway that is a great support in the daily mobility of its citizens and the government has been joining efforts to start including more electric buses in its fleet, having already the first electric bus running since 2020. From the Ministry of Energy and Mines, the proposal for the implementation of incentives to those who market or acquire these vehicles and the integration of charging stations to prepare throughout the territory to prepare at the infrastructure level was authorized. 

In the same year, 578 electric and hybrid cars were sold in Peru, a figure that symbolizes an increase of 57.8% compared to 2019 (Mariluz, 2019 ).   

How can Broggini Partners help? 

Broggini Partners for 22 years has been committed to contributing to the economic development in the area. We specialize in supporting the internationalization processes of companies, organizations and associations.  

If your company is interested in entering the Latin American market, at Broggini Partners we have the experience in sectors such as the automotive industry, to conduct market research, to search for business partners throughout the continent and to open partnerships abroad. 

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