Cars | 6/23/2009 12:00:00 AM
Luxury cars boom in Colombia
Incredibly enough, amidst the current financial crisis, Colombians are buying top quality cars like Maserati, Ferrari, Porsche, Audi, Mercedes Benz and BMW like never before. Four myths of this market have been put to rest.
Some years ago this was not even close of happening in Colombia and it seemed that only the most developed capitals in the world had these brands within reach. But now clients can find a 600.000 USD Ferrari on sale. This shows that the sector of the most exclusive cars has set its eyes on Colombia.
Figures reveal that important things are happing in this area. Last year, 4,688 luxury vehicles were sold in Colombia. Even though this only represents 2 per cent of the market of new cars in the country, it shows an important trend. Between 2006 and 2007 there was a 73 per cent increase in the sales of top of the range cars. Last year, when the whole industry fell 13 per cent, the sales of the main luxurious cars grew 10 per cent. Stats are eloquent. In 2008 Audi sold 61.9 per cent more than the previous year. BMW grew 35 per cent and Porsche 55 per cent, according to the stats provided by the company Econometría.
“The market is waking up”, says Marco Pastrana, manager of Audi in Colombia. He explains that many people who did not consider buying one of these cars, are now making up their minds.
There are many factors which explain this trend. To start with, the four myths of the market of top of the range cars are collapsing. The first one is the most obvious one: Colombia is unsafe and that is why buying an expensive car does not make any sense and could even be dangerous. According to Thomas Stärtzel, president and managing director of Porsche Latin America and who was in Bogotá for the inauguration of the Porsche Centre, this has changed radically in the last few years. “It is clear that the safety conditions in the country have improved a lot, thanks to president Alvaro Uribe’s policies”, he stated. Precisely, these better conditions were a key factor for the German company extending its presence in Colombia.
The truth is that until a few years ago, many did not consider the possibility of buying these types of vehicles because of risks regarding kidnapping and extortion. Today, that perception of insecurity is being left behind and the doors seem open for a multimillion dollar market.
The second myth is that there are few people who can buy expensive cars and who are capable are also under suspicion because of the origin of that money. Obviously, the price of these cars is astronomical for most Colombians, but explaining the sales rise of luxury cars with the argument that it is because of illicit businesses is like saying that illegal activities are the only ones which can provide people with a good amount of money. That is not true. Although one cannot hide the dangers of drug trafficking, it must also be said that this is a country which has transformed itself. There are currently more people with purchasing power who are capable to buy expensive vehicles and who get their money from legal activities. “I have got a Porsche and as soon as I found out that Maserati was coming to Colombia I became interested in buying one”, a well-known businessman told SEMANA while he was looking at the models at the Maserati stand.
It is positive that big brands commit themselves with businesses in Colombia. This helps the market to stop being a “top secret” subject and becoming a traditional commercial transaction. In fact, those businesses have showcases where anyone can see the products.
The profile of the people who buy these cars is much more normal than what is sometimes thought. “They are businessmen who have been successful and have dreamt of having one of these cars in Colombia. Surprisingly, there are many housewives who also think our new model for the whole family, the Porsche Cayenne, is attractive”, said Christian G. Pfeil-Schneider, manager of Autoelite, which represents Porsche in Colombia. Marco Pastrana, of Audi, thinks in a similar way: “There are young, successful people with a stable family, a profession and a good job”, he indicated.
The third myth is that the top of the range market is rigid, only available for the same people. This is different now and the commercial strategy of the companies has changed. They want to conquer new markets and they use methods which have proven to be successful by other car makers. Porsche and Audi have recently launched models to enter into different segments. That is why they are offering vans for the whole family, which has attracted new clients. BMW has used an aggressive commercial strategy making the most of the low dollar prices, which has caused this German company to be one of the most sold brands in the local market.
This business, in other words, behaves like any other. For example, it reacts quickly when the values fluctuate. The recent revaluation trend has caused the prices to fall dramatically. At the beginning of last year, a 100,000 dollar vehicle cost the equivalent of 260 million pesos. Today, that same vehicle costs 200 million pesos. It helps the client to save 60 million pesos just by taking the revaluation into account.
The high costs of the spare parts, the appropriate maintenance and the insurances for these vehicles are no longer a burden for possible buyers. These companies are well-known for their good service. Apart from that, if someone has paid a big amount for buying one of these cars, that same person will also pay a big amount to repair it or insure it.
Finally, the fourth myth that has been changed is that the top of the range cars are fragile and will not withstand transiting on Colombia’s badly damaged roads. As far as this aspect is concerned, Frank Kanayet, shareholder of GPC group which commercializes Maserati and Ferrari, says this is not a problem and gives his own example: “It is a lie that an expensive car is weak. I have been to the Colombian plains, to the coffee growing region, to Medellín and it is wonderful climbing the mountains with this car”.
The truth is that who are betting on the segment of luxurious cars are also confident that Colombia’ economy will soon return to its growing trend. If all goes well and the sector continues to grow, without doubt better cars will be seen more and more on the battered Colombian roads
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