The signing of a trade agreement between China and Ecuador opens up a number of opportunities, both for supplying Ecuador for exports and for imports that will arrive from China after the instrument enters into force. One of the segments that created the most expectations is the automotive sector. Chinese vehicles will be phased out over the next 15 years and are expected to enter with 0% tariff by 2038.

Currently, the maximum tariff limit for light vehicles (cars, SUVs, vans and trucks) coming from China is 35% and 40%. For heavy vehicles, the maximum tariff is between 15% and 5%, says Genaro Baldeón, executive director of the Association of Automobile Companies of Ecuador (Aeade).

The trade agreement foresees a gradual reduction of tariffs on Chinese cars until 2038, imported furniture will not be reduced

However, these vehicles – without the benefits of the agreement and with these tariffs on their backs – have already gained significant shares in the local market, driven by their low price and brand diversity. Baldeón points out that so far in 2023, of the 107 brands available on the market, 52 are Chinese, or 48.6%.

“These brands have grown in sales volume and market share in recent years. By 2022, they represented 33% of the market share”. And in the first four months of 2023, Chinese brands have a 30% market share with 13,956 cars sold, out of a total of 46,555 sold from January to April.

Several Chinese brands are in the top 10 best selling light vehicles in Ecuador. According to the last one ranking developed by the Association, in the car segment, Chery ranks sixth in sales; for SUVs, it is in fourth place, followed by Shineray, Jetour and DFSK; while the vans also include four brands from that country top 10: The Great Wall, JAC, Dongfeng and JMC.

Location in ranking sales of Chinese car brands:

Location in ranking sales of Chinese SUV brands:

Location in ranking sale of Chinese brands in trucks:

Comparing the development of Chinese brands in previous years, the exponential growth of their sales is evident. According to Aeada figures, only 2,048 Chinese vehicles were sold on the Ecuadorian market in 2007, ten years later, in 2017, the number increased fivefold and reached 12,214 units sold. The following year, 2018, it doubled to reach 21,280 Chinese vehicles sold, and by 2022, it will more than double with 45,688 units sold.

Why did Chinese brands stand out?

Baldeón explains that China started a process of economic transformation that enabled the opening of the economy to the world, which was highlighted in 2001 when it opened the door to globalization and entered the World Trade Organization (WTO), and was consolidated in 2008 when the crisis of the World Finance forced it to look for new markets, so China presented itself as the world’s factory, with an increase in production capacity.

“As part of this process, China has established itself as the world’s largest vehicle producer and has focused on increasing export volumes in recent years. According to OICA (International Organization of Motor Vehicle Manufacturers), China produced 27 million units in 2022, representing 32% of the world’s vehicles,” Baldeón points out.

87.5% more sales in the first quarter of 2023 supports diversification and preferences among ‘electrified’ vehicles in the local market

And that is that the commercial phenomenon happening in Ecuador with Chinese vehicles is not isolated. As China is the main producer of vehicles, its offer is constantly expanding and growing in all markets. For example, in Chile, sales of vehicles of Chinese origin represent 40% of the market; in Peru they reach 26% of the market; and in Mexico (despite being a country that produces the automotive sector) 23%.

What will be the predicted growth of Chinese brands and cars in Ecuador? Baldeón assures that there are no exact figures in this projection, but he relates them to growth figures in China. In the Asian giant, they predict a growth of 5% for this year, in fact, it grew by 4.5% in the first quarter of this year. In addition, the volume of bilateral trade between China and Latin America is projected to continue to grow, with projections to reach a record level of $400,000 million this year, according to Beijing, which will encourage the entry of various products and increase Chinese supply in Ecuador.