The Colombian automobile industry and its competitive challenges considering the economic environment

Abstract

This paper discusses the situation of the automobile industry in Colombia with respect to its macroeconomic environment in 2004 and potential strategic courses of action. Since the free trade agreements became effective in Colombia in 2011 and 2012, the landscape of the automobile industry suffered a harsh blow due to the introduction of new brands and technologies that were able to meet the consumer’s expectations with characteristics that exceeded those of national products by far. This industry has to find a way to optimize costs in order to offer prices that can compete against those of the foreign automobile industry, especially considering that there is already a large segment of the population that is paying lower prices for imported vehicles - far below local prices. Innovation plays a major role. The State could play a role to support this industry by funding the expansion of the infrastructure of assembly plants, providing assistance with the design and innovation throughout the production chain in the domestic automobile industry aiming at reducing manufacturing costs, and making national prices compete against international prices directly