The total automotive market in Ecuador, including retail and fleet, is estimated to be 105,000 units, based on the vehicles registered to the largest companies operating in the country. An exact count of fleet vehicles in operation is not possible in Ecuador, since the country does not track fleet registrations.

“The largest commercial fleets are those operating in the oil industry, transport, agriculture, consumer product trading companies, and telecommunication sectors,” said Marcelo Tezoto, Senior Manager – Fleet Sales for General Motors.

The other two strongest sectors acquiring fleet vehicles are car-rental companies and government agencies.

“Both retail and commercial new-vehicle sales in Ecuador improved in 2017,” said Tezoto. The increase in vehicle sales is attributed to improved economic conditions following two years of depressed sales when the market lost almost 60% of its volume. The depressed sales were caused by recessionary forces in the Ecuadorian economy resulting from the drop in oil prices, and as an aftermath of the devastating earthquake in April 2016. During the downturn, fleet sales experienced a reduction in volume in all sectors; however, the greatest reduction has been with the government and oil companies.

Another factor contributing to the downturn in the economy is that Ecuador uses the U.S. dollar as its official currency. The U.S. dollar’s strength has caused Ecuador’s exports to become less competitive.

Contributing to an uptick in new-vehicle sales in 2017 was Ecuador’s removal of import quotas for new vehicles. The growth in passenger car sales was reflective of the pent-up demand in the country created by economic downturn caused by the protracted slump in oil prices. However, following this initial spike in sales, the expectation is that vehicle sales will normalize and slow to more traditional levels.

A new model introduced for the Ecuadorian fleet market is the 2018 Chevrolet Sail, which is assembled in Ecuador from CKD-kits by General Motors of Ecuador. The Chevrolet Sail is based on the model built by Shanghai General Motors. Chevrolet is the No. 1 brand sold in Ecuador. Based on forecasted industry volume in Ecuador, the fleet business is expected to be 28% of overall Chevrolet sales in 2018.

In addition to Ecuador, the Chevrolet Sail is also built in Colombia at GM Colmotores. The Chevrolet Sail is sold in Peru and Chile, but is imported directly from China.

“Fleet sales in the Ecuadorian market, by vehicle segment, breakdown to approximately 42% cars, 24% pickups, 18% SUVs, 12% trucks, and 4% vans,” said Tezoto.

In general, the overall incentive available for fleet customers is a price discount that varies by vehicle model and reaching a maximum value of 3%.

Fleet leasing services are not regulated or monitored by any governmental entity, so there are many informal players in the market, some of whom are located in the “Oriente” Amazonian region to provide vehicles for the oil industry.

In Ecuador, parts availability is not an issue as in some areas of South America. There is an adequate supply of spare parts for fleet owners and customers in general.

Fuel Price Trends

The retail price of fuel at the pump is relatively low due to extensive government subsidies. The price of fuel varies by region in Ecuador, but, based on an average, the price of gasoline per liter is 39 U.S. cents, which is roughly the equivalent of $1.56 per gallon.

Fuel prices in Ecuador have remained stable. There is a tendency to prefer diesel pickups, because this fuel is cheaper than gasoline. As of April 2018, the price of diesel per liter is 27 U.S. cents, which is roughly the equivalent of $1.08 per gallon.

Used-Vehicle Market

The elimination of import quotas and the reduction of tariffs for new cars negatively impacted Ecuador’s used-vehicle market, causing prices to drop 9% to 15% in 2017.

Because of import quotas and tariffs, used vehicle prices in Ecuador have traditionally been among the highest in South America.

In November 2016, Ecuador joined the free trade agreement between Peru and Colombia and the European Union (EU), which has made it more attractive for some consumers to buy new cars.

While the country is emerging from its economic recession, there continues to be difficulty by some consumers in obtaining credit to buy used vehicles.

Taxation Trends

Ecuador is an oil-exporting country, which was hard hit by the decline in crude oil prices. Since oil represents 40% of the country’s export revenues, the dramatic decline in oil prices caused the economy to enter a recession in the first and second quarters of 2015. The reduced export revenues forced the government to cut spending and impose new taxes and tariffs to offset these revenue shortfalls.

EP Petroecuador is the national oil company of Ecuador and an important component of the Ecuadorian economy since oil exports account for a third of its federal budget. Government revenues have been boosted in recent years by the increased price of crude oil, reversing a period of price declines.

There has been a significant increase in the prices of vehicles because of new regulations and taxes on new vehicles imposed by the government.

On Dec. 29, 2017, Ecuador published a law including significant tax changes (Ley Orgánica para la Reactivación de la Economía, Fortalecimiento de la Dolarización y Modernización de la Gestión Financiera in Spanish). The law took effect on its publication date. The most important modification is the increase in the general corporate income tax rate to 25%. Previously, the general corporate income tax rate was 22%

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