Central America

SEMA News—July 2014

INTERNATIONAL
By Linda Spencer

Central America

An Increasingly Popular Regional Destination for U.S. Automotive Specialty-Equipment Products

The Toyota HiLux is a popular vehicle to customize in Central America. SEMA purchased a HiLux, which is popular elsewhere in the world but is not sold in the United States, so that SEMA-member manufacturers could measure the vehicle to create export-ready product. The international vehicle measuring session program is made possible through a partnership with the U.S. Department of Commerce.
The Toyota HiLux is a popular vehicle to customize in Central America. SEMA purchased a HiLux, which is popular elsewhere in the world but is not sold in the United States, so that SEMA-member manufacturers could measure the vehicle to create export-ready product. The international vehicle measuring session program is made possible through a partnership with the U.S. Department of Commerce.

With an estimated population of 42 million, Central America is an increasingly important regional market for U.S. goods. The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) eliminates trade barriers among the seven signatories, which include the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. Before this regional trade pact, tariffs on U.S. autos and parts to the region had averaged from about 4% to 9% and even up to 30% on certain products. Most of these import taxes disappeared immediately with CAFTA-DR approval, and the rest will be eliminated by 2015.

The U.S. government has named automotive parts, accessories and service equipment as among the best prospects for U.S. exports to the region. The U.S. Commercial Service in three of these Central American countries—Costa Rica, El Salvador and Guatemala—reached out to specialty-equipment distributors to gauge their opinions on a range of relevant topics for those interested in selling specialty-equipment products into the market. The topics included the perception of U.S. brands, what percentage of products carried are American brands and where local distributors see the market in five years.

The U.S. government and the distributors also reported on the opportunities as well as challenges in the market and what they mean for U.S. companies. They looked at the growth of the vehicle-
customization industry in these three nations, which are in geographic proximity to the United States. For example, the borders of Florida and Guatemala are only 900 miles apart.

Opportunities and Challenges

Thanks to the following U.S. Department of Commerce staff for conducting research on the growing specialty markets in their respective posts:

Ana Polanco
Senior Trade Specialist
Foreign Commercial Service
U.S. Embassy in Guatemala
ana.polanco@trade.gov
+502-2326-4258

Lidia Sosa
Senior Commercial Specialist
U.S. Department of Commerce, International Trade Administration
Embassy of the U.S. in El Salvador
Lidia.Sosa@trade.gov
+503-2501-3144
Fax: +503-2501-3067

Roy Fernandez
Commercial Assistant
Global Markets-International Trade Administration
U.S. Embassy San José, Costa Rica
roy.fernandez@trade.gov
Tel: +506-2519-2263

The United States is already the single largest trading partner for many countries overall and for specialty-equipment products specifically. The perception of U.S. products was very positive, with all specialty-product distributor respondents categorizing the impression of U.S. products as “favorable” or “very favorable.”

U.S. automotive specialty products already have significant shares of the performance and accessories market, ranging from 20% to 90%, based on the responses of the distributors participating in the survey. Some of the popular brands of products sold in Costa Rica include MagnaFlow, Rancho Suspension, MSD, K&N, Auto Meter, AEM, Meguiar’s, Torco, Flowmaster, CP Pistons, Mickey Thompson, Aeromotive, NOS, Holley, NX and Advanced Clutch Technology.

Sales of U.S.-exported used vehicles also increase the opportunity for customization, as the new owners of these second-hand vehicles often want to personalize the vehicles, and U.S. specialty-equipment manufacturers already make products for these vehicles (primarily Asian and U.S. brands exported from the United States).

Distributors setting up in the region complained about the large number of products either imported directly from the United States or brought back by consumers in suitcases from trips to the States and undercutting those who are trying to establish and grow the market for U.S. brands in local markets. Counterfeit specialty-equipment products were identified as a “significant” or “very significant” problem by many of the respondents in the three countries.

Local distributors are looking to work more closely with U.S. manufacturers to reduce the amount of time it takes to get products delivered, with a number of distributors working with U.S. consolidators but also interested in working more closely with the manufacturers directly. The local distributors highlighted the fact that their market is quite new and that they would appreciate manufacturers working closely with them to provide training and demonstrations. They were also looking for U.S. manufacturers with flexibility in minimum orders. Companies in all three countries were quite optimistic about the future of the industry, with a majority predicting market growth over the next five years.

The U.S. Embassy in Guatemala noted a number of positive industry developments in that country and provided some links.

  • Guatemala hosts the largest online car forum in Central America with almost 100,000 members from the region and around the world. Active members with several car clubs and online communities make this forum a key player in Guatemala’s automotive specialty aftermarket parts and tuning sector. Link: www.velocidadmaxima.com/forum.
  • Guatemala has one professional quarter-mile drag track, which is located near the capital, Guatemala City. This track, which is unique to the Central American region, has been certified by Federation Internationale de l’Automobile (FIA) and International Hot Rod Association (IHRA). In addition, the country has two 1/8-mile drag tracks. Pictures and information are available at www.club-aceleracion.com/googlemaps.php.
  • There is one circuit track, which holds national championship races yearly. Participants from Central America compete here. Racing categories include GT1, GT2, GT3, Super Tourism, Super Street, Vintage, Formula 3 and Novice. More information is available at www.autodromopedrocofino.com/siteapc.
Most Popular Vehicles to Customize

This list of some of the most popular vehicles to customize in the Central American region was compiled from the various respondents to a U.S. Commercial Service survey of local specialty-equipment distributors.

Make Model
Acura Integra
Acura RSX ’02–’12
Acura Type R ’96–’99
Audi S4
BMW 325i
BMW 335i
BMW 3 Series
BMW ’90s–Current
Chevrolet Trailblazer
Ford F Series
Ford F-150 Lightning
Honda Civic ’78–’13
Jeep SRT8
Mitsubishi Evo IV-X ’92–’10
Nissan 240SX, 180SX, 200SX
Nissan Sentra Z
Subaru Impreza
Toyota Starlet GT/Glanza V
Toyota Tundra
Toyota HiLux
Volkswagen Volkswagen/Audi ’05–Current
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