For the new year, light vehicles, vans and SUVs have a tariff charge below 10%. European vehicle prices have dropped since 2016.
The vehicles from Europe will be subjected, as of January 1, 2022, to a new tariff reduction as part of the entry into force of the sixth year of the agreement that Ecuador has with the European Union.
According to Association of Automotive Companies of Ecuador (Aeade), the decrease in the tariff burden would be in the order of 2% to 5%, according to the segment.
For this year, the segment of trucks over 9.3 tons and 20 tons will enter with a 0% duty. This type of truck is used by the productive sector to transport its products to different parts of the country.
On the other hand, a single-wheel drive SUV, for example, which paid 15% duty in 2021, will pay 10% the following year.
These are the best-selling vehicles from the European Union in Ecuador
With this, the union points out, that a drop in prices to the final consumer would be expected, as has happened in the last four years.
According to data from the union, there has been a significant reduction in prices, from at least $ 20,000, between 2016 and 2020, mainly for light vehicles (SUVs, vans and cars) that levied up to 40% duty.
The Heavy vehiclesAlthough they registered a lower reduction in their tariff burden, they maintained an average price variation of $ 15,000 in the same period. That is, if a truck cost about $ 155,642 until 2016, by 2020 it dropped to $ 138,484; a decrease of 11%.
| Segment | 2016 | 2020 | Variation in% |
|---|---|---|---|
| Truck | $ 155.642 | $ 138.484 | -11 % |
| SUV | $ 75.068 | $ 47.082 | -37 % |
| BY | $ 52.040 | $ 31.719 | -39 % |
| Car | $ 50.183 | $ 33.183 | -34 % |
However, although the expectation of the Ecuadorian industry for 2022 is that there will be a reduction in prices, some brands see this goal as distant due to the impacts generated by the international logistics crisis and the lack of parts for the automotive sector.
Esteban Vergara, Opel distribution manager, said that due to the problems generated by the pandemic and global inflation that exists due to the shortage of logistics transport and parts production, production costs in Europe have increased by about 15%.
In addition to a lack of inventory necessary to meet demand, Vergara believes that in 2022 the prices will increase between 3 and 5%, in the case of the brand. An additional factor, the spokesperson adds, is that the European segment has strong competition with units of Chinese origin.
Nevertheless, Genaro Baldeón, president of the automotive union, points out that the tariff reduction that is implemented, as part of the agreement with the European Union, has advantages since it facilitates the gradual introduction of various models and brands of European origin.
“This will set the trend for a few years, which will also be accompanied by lower prices, which will increase the percentage of participation of European brands in the national market,” he said.
Currently, in Ecuador, the participation of the European units in the national market increased as of 2017, when the tax relief process began.
Since the entry into force of the trade agreement and the start of the tariff reduction process, the participation of vehicle sales of this origin it has gone from 2.4% in 2016 to 8.6% in 2020. This reflects triple-digit growth.
The Aeade explained that most of the vehicles of European origin are light and, therefore, their period of tax relief is seven years. In this sense, its tax reduction process would conclude in 2024.
EU countries from which vehicles are most imported
Between January and November 2021, Slovakia, Spain and the Czech Republic they led the list of countries from which the most units are acquired.
From these three countries, 5,161 units were brought through November. The amount represents more than half of what was imported from EU countries, which was 7,853 in eleven months of the year.
These European nations are followed France, Germany, Hungary, Holland, Poland, Italy, Sweden and Belgium.
Additional measures
The automotive sector indicates that, despite the gradual decrease in tariffs, the staggered excise tax (ICE) that is applied to vehicles gives way to a “distortion in prices”.
For this reason, the specific request that the scope of the ICE rationalization that was implemented for hybrid vehicles is also implemented for internal combustion units.
Price reduction in electric and hybrid vehicles valued at more than $ 35,000 will be reflected in 2022
The Organic Law of Economic Development and Fiscal Sustainability, which entered into force on November 29, 2021, eliminated the ICE for electric and hybrid vehicles. (I)
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