El Salvador - Automotive Parts and Service EquipmentEl Salvador - Automotive Sector
Overview
Source: Central Reserve Bank of El Salvador and U.S. Department of Commerce, Bureau of Census, Foreign Trade Division TPIS Database: USHS Exports.
The United States is the most significant player in El Salvador’s aftermarket auto parts and accessories market. In a country with stagnant economic growth, U.S. imports in 2018 increased by 1% from the previous year. Industry leaders remain confident and expect higher growth in future years. With 30% of the total Salvadoran import market, U.S. companies enjoy a reputation for high quality products with excellent warranties.
The Vice Ministry of Transportation reported that the total number of vehicles in circulation is 1,182,662 in El Salvador, out of which approximately 40% are concentrated in the capital city of San Salvador. 454,282 are new vehicles and 728,380 are used.
Vehicles in circulation increased by 8% from the previous year. Additionally, due to the bad condition of roads and weather conditions, vehicles deteriorate quickly and need frequent repair and/or maintenance. Unreliable, unsafe, and inefficient public transportation are considerations by Salvadoran’s when deciding to buy a car.
Vehicles are distributed by type as follows: 531,821 automobiles, 211,809 pick-ups, 289,566 motorcycles, 40,067 heavy trucks, 32,545 light trucks, 34,615 minibuses, 7,351 buses, 10,578 truck heads and 13,283 trailers, 4,872 all-terrain vehicle (ATV), 116 ambulances, 6,039 other types.
61.55% of the used vehicles imported to El Salvador are between 5 and 8 years old. The government is trying to implement a new law to reduce the current used vehicle age allowed from eight years to seven for vehicles imported into the country.
Leading automotive brands present in the market include: Audi, Porsche, Nissan, Honda, Hyundai, Kia, Toyota, Chevrolet, Mitsubishi Motors, BMW, Hino, Daihatsu, Chevy, Isuzu, Jeep, Ford, Dodge, Mazda, VW, and Peugeot.
El Salvador’s automotive sector is highly competitive and price sensitive. There are no significant local manufacturers of auto parts and accessories and the market is mainly supplied by imports. Asian companies have gained market share as the number of Japanese, Korean, and Chinese auto manufacturers continue to grow in El Salvador. Three countries (Colombia, Brazil and Germany) make up a third of imports into the market imports but do not yet threatened the dominant position for imports held by the United States. Taiwanese companies are known for their ability to compete on price and are positioned to take a greater share of the import market. A partial list of brands currently in the market include: Amalie, ArmorAll, Turtle Wax, Mobil Oil, Goodyear, Bendix, Alloy International, Die Hard, BF Goodrich, Dayco, STP, Fleetguard, Castrol, Champion Spark Plug, American Quality Lubricant, Federal Mogul, Pennzoil, Prestone, among others.
Most of the end users of auto parts and accessories are owners of mechanic and repair shops and individual vehicles. They prefer to purchase auto parts and accessories directly from the distributor/retailer. Salvadoran distributors are extremely receptive to U.S. products. Many executives speak English and are familiar with U.S. business practices. Moreover, El Salvador’s geographic proximity to the United States provides greater access to U.S. companies and faster inventory delivery in comparison with Asian companies.
The breakdown of end-users is as follows:
Companies that seek to do business in El Salvador should work closely with a local distributor. Assigning one distributor for the size and demand of the country is appropriate. A potential Salvadoran distributor may handle various products and often seeks an exclusive distributorship. After conducting exhaustive due diligence and establishing a solid business relationship with a potential partner, U.S. companies should consider using letters of credit, extending lines of credit, or the Small Business Administration (SBA) financing programs.
Breakdown of distribution channels are as follows:
Leading Sub-Sectors
The top opportunities include spare and replacement parts for gasoline and diesel motors. For instance:
Opportunities
There are no manufacturers of automotive parts and accessories in El Salvador. Import tariffs for auto parts under HTC 8708 and most vehicle accessories under HTC 8714 were automatically reduced to zero after the CAFTA-DR implementation. U.S. brands are always in high demand by Salvadoran distributors who are looking for innovation, high quality, durability, warranty, and fast delivery.
Currently, 90% of used vehicles purchased in El Salvador are imported from the United States and many are salvaged cars bought at auctions. The salvaged vehicles are then repaired and sold in the local market. Auto repair shops play a key role in influencing customers on purchasing decisions.
Automotive accessories are a niche market in El Salvador. “Tuning up” is now a very well-known term. Tuning up has become a way to personalize the characteristics of a vehicle to the owner's preference in order to provide better fuel economy and more power or just to change the appearance. Exterior modifications have increased the demand of accessories and parts such as: front and rear bumpers, splitters, light weight wheels and spoilers. There are no restrictions to customize vehicles in El Salvador. Consumers like to customize: wheels and rims, auto sound and alarms, spoilers, LED taillights and others.
Repair shops are seeking current generation diagnostic equipment. Tools for technical maintenance include diagnostic software, scanners, electronic measure systems, and pneumatic tools, among others. Shops that handle collision repair need welding equipment, cutting tools, adhesives, glass repair kits, spray guns, batch ovens, glass protection films and other equipment related to body repair.
Public transportation (buses) and heavy-duty transportation (trucks) are the main end users of remanufactured parts. Remanufacturers also import and distribute new parts, some of which are used as replacement parts in rebuilt engines. The parts are mainly imported from the U.S., China, Mexico, and Japan. Remanufacturers explained that a good portion of their customers buy imported used engines locally and have them remanufactured.
Remanufactured parts and used parts are sold through new parts distributors as well as through smaller shops in the city center. The primary parts distributors which sell used and remanufactured parts in many cases do not carry them as a separate line of products, but rather in packages. For example, a brake system kit might include a remanufactured spare part. Rebuilt or remanufactured parts which are in heavy demand in the country are brake and clutch systems and engines for heavy duty transportation.
Unlike new parts, importers of used, remanufactured and rebuilt parts, do not have to show an invoice from the manufacturer to calculate the 13% tax which is estimated by the Salvadoran Customs authorities.
As of 2019, there are no local distribution of electric vehicles (EV). In 2019, one battery charging station was opened in El Salvador. DELSUR, an electricity distribution company, has started the promotion of electric mobility and has imported the first EV. The country does not have any regulations or subsidies for EV but is expected this market will grow in the coming years.
There is an existing proposed law that was submitted to the Legislative Assembly to regulate Electric Transportation. If the proposed law is formally approved, there will be good opportunities for U.S. electric mobility companies.
The most common public bus brands are: Blue Bird, International, American Motors, Mercedes Benz, and Hyundai. The Ministry of Public Transportation reported that there will be an increase of new bus imports due to the requirement to replace buses older than 20 years.
Growth in the construction sector and transportation infrastructure projects in 2020 will increase the demand of commercial vehicles and heavy-duty parts.
There are two associations that represent the interests of the automotive sector:
Web Resources
Vice Ministry of Transportation (VMT)
Salvadoran Association of Distributors of Vehicles (ASALVE)
Salvadoran Reserve Bank (BCR)
U.S. Commercial Service Contact
Sandra Hernandez, Commercial Assistant: sandra.hernandez@trade.gov
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
| 2017 | 2018 | 2019 (est.) | 2020 (est.) | |
| Total Market Size | 266,957,106 | 249,037,478 | 251,527,853 | 264,043,131 |
| Imports | 276,117,188 | 259,937,733 | 262,537,110 | 265,162,481 |
| Exports | 9,160,082 | 10,900,255 | 11,009,257 | 11,119,350 |
| Imports from the U.S. | 45,967,626 | 46,471,430 | 46,936,144 | 47,405,505 |
The United States is the most significant player in El Salvador’s aftermarket auto parts and accessories market. In a country with stagnant economic growth, U.S. imports in 2018 increased by 1% from the previous year. Industry leaders remain confident and expect higher growth in future years. With 30% of the total Salvadoran import market, U.S. companies enjoy a reputation for high quality products with excellent warranties.
The Vice Ministry of Transportation reported that the total number of vehicles in circulation is 1,182,662 in El Salvador, out of which approximately 40% are concentrated in the capital city of San Salvador. 454,282 are new vehicles and 728,380 are used.
Vehicles in circulation increased by 8% from the previous year. Additionally, due to the bad condition of roads and weather conditions, vehicles deteriorate quickly and need frequent repair and/or maintenance. Unreliable, unsafe, and inefficient public transportation are considerations by Salvadoran’s when deciding to buy a car.
Vehicles are distributed by type as follows: 531,821 automobiles, 211,809 pick-ups, 289,566 motorcycles, 40,067 heavy trucks, 32,545 light trucks, 34,615 minibuses, 7,351 buses, 10,578 truck heads and 13,283 trailers, 4,872 all-terrain vehicle (ATV), 116 ambulances, 6,039 other types.
61.55% of the used vehicles imported to El Salvador are between 5 and 8 years old. The government is trying to implement a new law to reduce the current used vehicle age allowed from eight years to seven for vehicles imported into the country.
Leading automotive brands present in the market include: Audi, Porsche, Nissan, Honda, Hyundai, Kia, Toyota, Chevrolet, Mitsubishi Motors, BMW, Hino, Daihatsu, Chevy, Isuzu, Jeep, Ford, Dodge, Mazda, VW, and Peugeot.
El Salvador’s automotive sector is highly competitive and price sensitive. There are no significant local manufacturers of auto parts and accessories and the market is mainly supplied by imports. Asian companies have gained market share as the number of Japanese, Korean, and Chinese auto manufacturers continue to grow in El Salvador. Three countries (Colombia, Brazil and Germany) make up a third of imports into the market imports but do not yet threatened the dominant position for imports held by the United States. Taiwanese companies are known for their ability to compete on price and are positioned to take a greater share of the import market. A partial list of brands currently in the market include: Amalie, ArmorAll, Turtle Wax, Mobil Oil, Goodyear, Bendix, Alloy International, Die Hard, BF Goodrich, Dayco, STP, Fleetguard, Castrol, Champion Spark Plug, American Quality Lubricant, Federal Mogul, Pennzoil, Prestone, among others.
Most of the end users of auto parts and accessories are owners of mechanic and repair shops and individual vehicles. They prefer to purchase auto parts and accessories directly from the distributor/retailer. Salvadoran distributors are extremely receptive to U.S. products. Many executives speak English and are familiar with U.S. business practices. Moreover, El Salvador’s geographic proximity to the United States provides greater access to U.S. companies and faster inventory delivery in comparison with Asian companies.
The breakdown of end-users is as follows:
- Freight and passenger transportation companies
- Repair and maintenance shops
- Service stations, gasoline dealers and lubrication centers
- Government agencies
- Other end-users: car rentals and cargo companies.
Companies that seek to do business in El Salvador should work closely with a local distributor. Assigning one distributor for the size and demand of the country is appropriate. A potential Salvadoran distributor may handle various products and often seeks an exclusive distributorship. After conducting exhaustive due diligence and establishing a solid business relationship with a potential partner, U.S. companies should consider using letters of credit, extending lines of credit, or the Small Business Administration (SBA) financing programs.
Breakdown of distribution channels are as follows:
- Importers and distributors of automotive parts and accessories
- Tire distributors
- Wholesalers
Leading Sub-Sectors
The top opportunities include spare and replacement parts for gasoline and diesel motors. For instance:
- Air conditioning machines; containing a motor driven fan, other than window or wall types, incorporating a refrigerating unit
- Oil petrol-filters for internal combustion engines.
- Vehicle parts and accessories; n.e.c.[1] In heading no. 8708
- Radial Tires
- Electric accumulators; lead-acid, of a kind used for starting piston engines, including separators.
- Engines; parts, suitable for use solely or principally with spark-ignition internal combustion piston engines.
- Retreaded or used pneumatic tires of rubber; solid or cushion tires, tire treads and tire flaps, of rubber
- Suspension shock absorbers
- Gaskets, washers and other seals of valves
- Machinery; intake air filters for internal combustion engines
- Fans
- Safety products: alarms, GPS and sound systems.
- Diagnostic equipment.
Opportunities
There are no manufacturers of automotive parts and accessories in El Salvador. Import tariffs for auto parts under HTC 8708 and most vehicle accessories under HTC 8714 were automatically reduced to zero after the CAFTA-DR implementation. U.S. brands are always in high demand by Salvadoran distributors who are looking for innovation, high quality, durability, warranty, and fast delivery.
Currently, 90% of used vehicles purchased in El Salvador are imported from the United States and many are salvaged cars bought at auctions. The salvaged vehicles are then repaired and sold in the local market. Auto repair shops play a key role in influencing customers on purchasing decisions.
Automotive accessories are a niche market in El Salvador. “Tuning up” is now a very well-known term. Tuning up has become a way to personalize the characteristics of a vehicle to the owner's preference in order to provide better fuel economy and more power or just to change the appearance. Exterior modifications have increased the demand of accessories and parts such as: front and rear bumpers, splitters, light weight wheels and spoilers. There are no restrictions to customize vehicles in El Salvador. Consumers like to customize: wheels and rims, auto sound and alarms, spoilers, LED taillights and others.
Repair shops are seeking current generation diagnostic equipment. Tools for technical maintenance include diagnostic software, scanners, electronic measure systems, and pneumatic tools, among others. Shops that handle collision repair need welding equipment, cutting tools, adhesives, glass repair kits, spray guns, batch ovens, glass protection films and other equipment related to body repair.
Public transportation (buses) and heavy-duty transportation (trucks) are the main end users of remanufactured parts. Remanufacturers also import and distribute new parts, some of which are used as replacement parts in rebuilt engines. The parts are mainly imported from the U.S., China, Mexico, and Japan. Remanufacturers explained that a good portion of their customers buy imported used engines locally and have them remanufactured.
Remanufactured parts and used parts are sold through new parts distributors as well as through smaller shops in the city center. The primary parts distributors which sell used and remanufactured parts in many cases do not carry them as a separate line of products, but rather in packages. For example, a brake system kit might include a remanufactured spare part. Rebuilt or remanufactured parts which are in heavy demand in the country are brake and clutch systems and engines for heavy duty transportation.
Unlike new parts, importers of used, remanufactured and rebuilt parts, do not have to show an invoice from the manufacturer to calculate the 13% tax which is estimated by the Salvadoran Customs authorities.
As of 2019, there are no local distribution of electric vehicles (EV). In 2019, one battery charging station was opened in El Salvador. DELSUR, an electricity distribution company, has started the promotion of electric mobility and has imported the first EV. The country does not have any regulations or subsidies for EV but is expected this market will grow in the coming years.
There is an existing proposed law that was submitted to the Legislative Assembly to regulate Electric Transportation. If the proposed law is formally approved, there will be good opportunities for U.S. electric mobility companies.
The most common public bus brands are: Blue Bird, International, American Motors, Mercedes Benz, and Hyundai. The Ministry of Public Transportation reported that there will be an increase of new bus imports due to the requirement to replace buses older than 20 years.
Growth in the construction sector and transportation infrastructure projects in 2020 will increase the demand of commercial vehicles and heavy-duty parts.
There are two associations that represent the interests of the automotive sector:
- Salvadoran Association of Auto Parts Importers (ASIRA)
- Salvadoran Association of Distributors of Vehicles (ASALVE)
- The Automotive Aftermarket Industry Week (AAIW): SEMA and APPEX shows in Las Vegas, NV, November 5-8, 2019
Web Resources
Vice Ministry of Transportation (VMT)
Salvadoran Association of Distributors of Vehicles (ASALVE)
Salvadoran Reserve Bank (BCR)
U.S. Commercial Service Contact
Sandra Hernandez, Commercial Assistant: sandra.hernandez@trade.gov
[1] n.e.c.: Not elsewhere classified