With the trade agreement with South Korea, a new vehicle assembly factory is projected in Ecuador

The national automotive market would add a new vehicle assembly plant to the three already operating in the country: General Motors-Ómnibus BB (Chevrolet), Ciauto (Great Wall and Shineray), Aymesa (Kia and Hyundai). In addition, there are other companies that are authorized to assemble, but that currently do not operate.

This new plant would be installed to assemble South Korean vehicles, which are currently assembled in the country at the Aymesa plant, where the Korean brands Kia and Hyundai are assembled. At least that is what the President of the Republic, Guillermo Lasso, hinted at last Tuesday when announcing the need to move forward with the installation of this new plant that would form part of the benefits generated by the trade agreement being negotiated with South Korea. South and that it has already entered its final stage.

The president coincided with the Korean delegation that attended the inauguration of the president of Brazil, Lula Da Silva, on January 1.

“We agree on the progress made in relation to the Strategic Economic Cooperation Agreement (SECA) and on the need to specify the investment from Korea, in the installation of a vehicle assembly factory in Ecuador,” revealed Lasso.

China supplies components to global vehicle brands, but also imports designs and parts from Europe and the United States for its own.

However, the national automotive industry took the announcement made by President Lasso by surprise. For example, Genaro Baldeón, executive president of the Association of Automotive Companies of Ecuador (Aeade), indicated that he did not know details of the new project.

The Association registered a historical record for vehicle sales, between imported and assembled, in the accumulated period from January to November 2022, reaching 128,523 units, a growth of 17.1% compared to the same period of the previous year.

For David Molina, executive director of the Chamber of the Automotive Industry of Ecuador (Cinae), the announcement of a new plant in the country was also surprising.

“Regarding the announcement to install a Korean vehicle plant here in Ecuador, it is an announcement that we do not know about here in the sector, we do not know where that possibility came from. What must be anticipated is that Korean vehicles are already being assembled in the country, in fact here the Aymesa plant assembles Kia vehicles and Hyundai vehicles, we do not know what the president’s proposal would be to install a plant for Korean vehicles,” Molina said. , who expects to know more details next week, when representatives of the business sector meet with the team that is negotiating the agreement with South Korea, to find out where the installation of the new plant would point with the benefits of the future trade agreement with the country Asian.

However, he anticipated that in terms of the possible advantages, such as a better price for the sale to the public of the vehicles that are assembled in that plant, there would be no changes with what is currently available on the market, since he affirmed that currently the CKDs ( parts and pieces) already enter the country without paying tariffs. According to the latest Cinae report, from January to November 2022, the import of auto parts grew in that period by around 17%, going from $432 million (2021) to $506 million.

Participation of the main parts and pieces that are imported to assemble vehicles in the country:

• Tires: 33%
• Suspension system: 8%
• Satellite tracking: 8%
• Clutches and their parts: 7%
• Brakes and their parts: 6%
• Batteries and their parts: 4%
• Gearboxes and their parts: 4%
• Wheels and their parts and accessories: 4%
• Other auto parts: 4%
• Fenders, engine covers, doors and their parts: 3%
• Steering systems and their parts: 3%
• Others: 16%

In addition, Cinae highlighted that all vehicles assembled in the country must comply with the 19% local content of Ecuadorian auto parts.

However, in contrast, there has been a slight decrease in the sale of assembled vehicles, of which, from January to November 2022, 14,493 vehicles were sold in the country, 1,102 units less than in the same period of 2021. This generated that the share of assembled vehicles in total sales will drop from 14.8% in 2021 to 10.9% last year.

Trade agreement between Ecuador and South Korea: with “important progress” the VIII Round of Negotiations closed

Regarding the participation of vehicles assembled by brands, General Motors (Chevrolet) leads it with 57%, followed by Ciauto (Great Wall and Shineray) with 29.4% and Aymesa with 13.2% of Kia and the 0.4% of Hyundai.

Molina projects that 2022 will close with about 16,000 assembled vehicles.

Meanwhile, this newspaper consulted the Ministry of Production, Foreign Trade, Investment and Fisheries, the details of the project of the new plant announced by President Lasso, but until the closing of this edition they did not send the information.