No one is pretending it’s an easy country to run. On Friday, the Departamento Administrativo Nacional de Estadística – DANE Colombia revealed the latest real sector data for January, and it was positive. Manufacturing production rose 1.9%, that’s two glorious months in positive territory, however, retail sales grabbed the headlines. They rose 10.1% versus 4% expected. Electronic goods rose 50% and vehicles 23% – the Colombian economy has long since been based on commerce and locals due to lower inflation and overnight rates are back to doing what they are best at.

But as BBVA reported last week, the flip side is that they are poor at saving, and that has a downside for the economy as there is less easy money to lend and invest.

Also, that same rush to the shops as domestic demand is driving imports upwards, with manufacturing goods in high demand. Exports can’t keep pace and that leads us to the biggest economic issue the country is facing – fiscal imbalance. Huge deficits each month and despite remittances now regularly hitting $1 billion USD per month, it’s not enough.

Colombia needs to spend to lift more people out of poverty, to provide education and the opportunity for dignified lives, but there is a constant struggle to balance the books. For several years Colombia has struggled, due to external events, to get inflation under control, but the second spending gets easier we see the above cycle.

For all the chatter about commodities, they are not a long or even medium-term solution. It’s been around a decade since Colombia last produced 1 million BPD of oil – those days are gone and the country needs to seek new solutions to balance the books. Tourism is certainly one and agriculture is the next, however, that will require land reform and the repatriation of lands stolen by the ruling elite, especially in the years following the turn of the century, it’s hard to see that happening soon.

Here endeth the lesson.

Have a great week.

Roops.

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Headline photo: One of the displays from Colombiatex in 2016. (Photo credit: Loren Moss)

As expected, President Petro flew to Davos to be upstanding in front of the world. The discourse didn’t deviate from that expected, as Petro promoted Latin America’s capacity to convert to green energy when compared to other regions of the world – Colombia is at the forefront of that. Mining Minister Velez spoke of the urgent need to freeze oil exploration licenses and prioritize tourism and agriculture, which in time will be a good strategy but somewhat at odds with what Finance Minister Ocampo said more recently, never helpful.

Ecopetrol’s (NYSE: EC) Felipe Bayón was also in Davos as the company was invited to join the World Hydrogen Council – the only company in the region who are part of the entity. The stock itself is doing well, trading at levels not seen since before President Petro was elected.

The week started the Real Sector data for November and whilst the Manufacturing Production number (4.5%) was in line with expectations and only moderately lower than 5.3% in October the Retail Sales number was a different issue. Whilst it rose 1.7% on a headline basis, it was below the consensus of 1.9% and more concerningly once all the various elements related to vehicles are stripped out – the number was 0.4%.

On Wednesday we had the Economic Activity reading for November and it fell once again to 3% – it stood at 4.6% in October. To context that, it is the lowest reading since March 2021 when the comparable was with the low point of Covid, a clear reflection of a slowdown.

Another number that slipped under the radar was the Sept-Nov informal employment data. It stood at 58.2% on a national basis and 43.9% when measured in urban areas. Whilst there are years of work ahead to lower the numbers, these were at least lower than the previous time.

The final data of the week was the Import numbers for November – it was down 7.7% YoY but at US$6.04bn it was still a big number. The Trade Deficit of US$1.1bn was also unwelcome, if expected. Manufacturing, which is the dominant sector fell 12% and this dragged the overall number downwards. Sectors such as Vehicles, Pharma and Iron & Steel.

The markets followed those overseas which meant they were tentative. As mentioned above, Ecopetrol fared well due to China and the oil price, although now it is beginning to buttress up against its price targets. Oil also kept the Peso honest, battle has been joined at the ~$4680 resistance level but the currency appears to want to head lower still.

Please find below the LinkedIn Video :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_colombia-davos2023-economaeda-activity-7022136804069777408-Hqxy?utm_source=share&utm_medium=member_desktop

All in all – a busy week – have a good weekend.

Roops

Consumer Confidence (-22.3%) from Fedesarrollo for December came in slightly higher than the -26.4% expected and represented a modest reversal upwards from November. Both consumer outlook and economic expectations rose slightly.

In terms of propensity to buy, there was a mixed picture with consumer durables slightly better, housing down, and a gap upwards in the appetite to buy vehicles (from -70.1% to -51.6%). From this one number it is hard to draw any conclusions but there appears to be a stubbornness to both the economy and sentiment that few expected at this point.

The latest financial sector numbers for October saw a 1.3% MoM in the overall loan portfolio but analysts are pointing to another sizable increase in provisions and more especially the 3.05% increase in NPLs MoM; one to keep an eye on.

A few weeks ago, I spoke optimistically about the improving weather. In my defense I mentioned the fragility of the situation, and it was clearly a case of heart over head. Since then, I have reported on a disappointing year for the coffee sector and now the rains have returned once again and maybe here for a few months still. President Petro was forced to cut short his trip to Chile in order to visit Cauca where the Pan-American highway has been blocked by landslides, causing tremendous issues for the local population. Again, a situation to keep an eye on.

Later today the Central Bank will release their latest economist survey which will be watched with interest – where will their call be on the terminal interest rate – a week ago we saw JP Morgan move to 13.5%.

Please find below the LinkedIn Video :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_colombia-economy-peso-activity-7019637902506631168-SI8s?utm_source=share&utm_medium=member_desktop

That is it for this week – have a restful weekend

Roops

This means that $722.9 million USD were exported to Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, México, Panamá, Paraguay, Perú, Dominican Republic, Uruguay and Venezuela. In volume, 289,791.7 tons were sold to these countries, an increase of 3.1%.

Compared to the same month in 2021, this meant an increase of 11%, and in relation to September 2019, the growth was 27.8%.

Of the total goods sold by the country to this region in September, with which the government of President Gustavo Petro seeks to strengthen economic and trade integration, almost half (44.5%) were non-mining energy goods.

Plastics, vehicles for passenger transportation, palm oil, medicines, candies and sweets, soaps, soluble coffee, beauty preparations, paper and cardboard, among others, are the main products exported to this part of the world.

“We advocate for a joint agenda in economic and commercial matters, but above all in productive complementation, border integration and so many other things in the region. It is necessary to return to having common objectives within a framework of internationalization with a human face and to continue strengthening the CAN and mechanisms such as the Pacific Alliance,” said the Minister of Trade, Industry and Tourism, Germán Umaña Mendoza.

In the first nine months of this year, the 16 countries mentioned above received $6,225.6 million USD in non-mining and energy goods from Colombia, which translates into an increase of 19.7% compared to the same period in 2021 ($5,202.9 million USD) and 29% compared to January-September 2019 ($4,823.1 million USD).

Between January-September, Colombia exported $6.2 billion USD in non-mining goods to 16 Latin American countries. In the first 9 months of the year, global foreign sales of non-mining energy goods totaled $16.5 billion USD.

In volume, this represented 2.5 million tons for a 3% growth compared to a year ago.

Venezuela

It should be noted that Venezuela has been increasing its share receiving Colombia’s non-mining energy exports. From representing 1.6% of this type of sales a year ago and occupying 17th place in this ranking, today it represents 2.7% of these exports and occupies 7th place.

Between January and September of this year, exports of non-mining goods to Venezuela reached $438 million USD for a growth of 108.4% compared to the same period of 2021, when it represented “only” $210,4 million USD.

Among the goods most exported to Venezuela are sweets, plastics, fertilizers, palm and soybean oils, margarines, laminated products, bakery products, compresses and electric accumulators.

Non-mining energy goods

As for non-mining energy goods exports to the world, in September alone, Colombia sold $1.831 billion USD in this type of product, which is their highest value exported in a September. It represents a growth of 19% compared to the same month of 2021 and 48.9% compared to the ninth month of 2019, a year before the covid-19 pandemic.

Exports in September were driven by industrial products, Ministry of Commerce classification, which accounted for 62.6% of the non-mining market basket in September and grew 13.5% compared to the same month of 2021.

In this group, some products stand out for their growth such as doors, windows and their frames (266.6%); vehicles for passenger transportation (116.8%); coffee extracts and concentrates (73.5%); cane or beet sugar (32.4%); other hair preparations (16.1%) and chocolates, confectionery and candies (15.3%), among others.

In this same month, exports of primary products to the world, according to the classification of the Trade portfolio, represented 37.3% of non-mining exports and grew 30% when compared to the same period of 2021.

Among these products, we can highlight the growth of unroasted coffee, whose exports grew 26.3%. In addition, bananas and plantains increased 47.9%; flowers (28.6%); frozen beef (14.4%); Hass avocado (53.6%); tilapia fillets (147.9%) and Tahiti lime (61.3%), among others.

“In the government of President Gustavo Petro we work to strengthen the domestic market, exports, to replace imports and to generate income that allows the reduction of inequality. In this purpose, it is essential to promote the creation of small and medium-sized companies to create more exportable supply and integrate them into international value chains,” said the Minister of Commerce, Industry and Tourism, Germán Umaña Mendoza.

The main destination for exports of non-mining energy goods in September was the United States, which accounted for 29.8% of these sales. Exports to that market totaled $545.3 million USD, an increase of 35% compared to the same month last year. The second most important market for these exports was Ecuador, which accounted for 8.4%. They totaled $153.1 million USD, an increase of 1% compared to September 2021. The third most important destination was Brazil, which accounted for 6.1% of these exports. In September they reached $111.2 million USD, an increase of 28%.

Between January and September of this year, Colombia’s exports of non-mining and energy goods reached $16.48 billion USD and represented 37.6% of total domestic sales abroad.  This is the highest amount exported for this period in history. They increased 26.2% compared to the same period in 2021 and 43.3% compared to January-September 2019, the year prior to the pandemic generated by covid.

It is also interesting to note that Colombia’s total exports to the United States were $11.4 billion USD in the first nine months of the year, compared to $901.82 million USD for Canada, $5.7 billion USD for the European Union and $481.26 million USD for the United Kingdom.

Above photo: Port of Cartagena (photo © Loren Moss)

The reading of -14.7% was better than the -16.1% consensus and above the April number of -17.5%. In context we haven’t hadn’t had a positive reading since March 2019 (+1.2%) – but the confidence reading has seen a lot of volatility over the past few years, since the -41.3% number in March 2020.

In terms of consumer expectations, we saw an improvement from -7.4% to -3.5%.

All three sub-sectors saw improvements:

• Do you think that within a year your household will economically do better, worse or the same as now?
• Do you think that within the next twelve months we will have good or bad economic times?
• Do you think that the country’s economic conditions will be better or worse within a year than they currently are?

Moving onto economic conditions there was a modest improvement from -32.6% to -31.5%, but versus 12 months ago (-61.7%) there is clearly a sizable move upwards. One noteworthy improvement (-23.4% to -17.9%) was in the area ‘Do you think that your household is economically doing better or worse than a year ago?’

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

Moving onto propensity to buy we saw improvements in all sectors, with housing the standout move.

• Housing -22.6% (from -33%).
• Durable Goods -41.7% (from -45.1%).
• Vehicles -59.3% (from -63.3%).

Next stop Retail and Industrial Confidence on June 23.

Link to Full Report : https://www.fedesarrollo.org.co/encuestas/consumidor-eoc

________________________________________

That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops

Photo: Andrés Jiménez has worked for various global automakers in Colombia and has now become the local Dutaci representative and importer at Ducamotocol S.A.S. (Photo credit: Loren Moss)

High-end Italian motorcycle maker Ducati has begun to see more potential in the nation in recent years and now, through its new local representative and importer Ducamotocol S.A.S., has a presence in both Medellín and Bogotá. Within the next two years, the company plans to branch out even further to establish sites in the western Colombian city of Cali and Bucaramanga in the east.

To learn more about the company’s strategy and growth plans in Colombia, Finance Colombia Executive Editor Loren Moss recently sat down with Andrés Jiménez.

One of Ducati’s showpiece motorcycles in the Medellín showroom. (Photo credit: Loren Moss)

Loren Moss: So, tell me a little about your story. Obviously, Ducamotocol was made especially to represent Ducati, but tell me a little about your story in the automotive sector? How is it that you became the exclusive representative of Ducati here in Colombia?

Andrés Jiménez: I have been working in the automotive sector for 18 years in multinational companies like General Motors and Volkswagen Group. Ducati came to us through a bidding process opened by Ducati in search for a new representative in Colombia. Our partners are foreign investors who already work with the brand in other countries.

“For 2020 our plan is to be present in Cali and Bucaramanga as well. Now we are focused on doing our best here in Medellín and in Bogotá.” – Andrés Jiménez of Ducamotocol

Loren Moss: Each market is different. Something I believe after living some years here is that Colombia’s geography is very different. It has more mountains and curves, and in regards to the market, the profile of the person who purchases motorcycles is very different compared to, say, the United States or Germany. What are the unique characteristics of the Colombian market and how does this affect the brand selection? What is the profile of the Ducati buyer in Colombia?

Andrés Jiménez: Ducati is a renowned brand worldwide. We have identified several profiles of customers. There are some customers that buy Ducatis essentially for recreational purposes, but Ducati‘s portfolio is quite broad and can be applied to many uses.

Touring style is very enjoyable for mountains, and for unpaved roads and off-road we have options like the Scrambler. There is another profile for the more frequent user, the person who uses a motorcycle daily for its mobility.

But for everyone, Ducati is for those people who are searching for a brand that represents style, prestige, and that offers a performance that can not be found anywhere else.

(Photo credit: Loren Moss)

Loren Moss: Some other brands of motorcycles are making changes to adapt to the current market. In the Feria de las Dos Ruedas (Two-Wheel Fair) in Medellín, some said they were going to change the ratio of the gears in Colombia. They said some changes must be made to adapt to this market, basically. What is Ducati’s strategy to be successful in this market?

Andrés Jiménez: I would not be afraid to say that Ducati is the only manufacturer that has one factory worldwide. All the motorcycles seen here — or in the United States or in any other country — have been manufactured in the same factory which is in Bologna, Italy.

For other brands, they all have factories in different places of the world. This always alters the quality levels. It’s not possible to guarantee that one motorcycle will be identical to another.

Our motorcycles are designed so that driving modes can be configured. One, like the 1260, already has seven driving modes configured. So, what a brand must do in the manufacturing level with technology, here can be done with precision.

Loren Moss: Yes, the novel technology of Ducati is very impressive. So, you have a site in Medellín and you are opening one in Bogotá. Are you thinking about other cities?

Andrés Jiménez: Yes. For 2020 our plan is to be present in Cali and Bucaramanga as well. Now we are focused on doing our best here in Medellín and in Bogotá.

One of Ducati’s Scrambler models in Medellín. (Photo credit: Loren Moss)

Loren Moss: How is the community of Ducati owners? There are some other brands, like Harley, that have a group of users who are very close and always hold events. Does Ducati have something similar among owners or future owners?

Andrés Jiménez: Yes. I can summarize the community in two words: passionate and demanding. They are passionate for the brand — it’s in their veins. And they are demanding in the sense that they must maintain their motorcycle.

Here in Colombia, we have two official clubs approved by the brand. The community oversees strengthening the brand, and it’s constantly active in making events and championing the brand in everything it does.

Loren Moss: I can see that you have a very modern workshop in every aspect that offers excellent services.

Andrés Jiménez: I call the workshop the surgery room — and the technicians are the surgeons. It always needs to be just as it is today. It’s a very clean environment. It’s an environment where some art is made as well. These motorcycles have very advanced technology, and highly trained technicians are required for their maintenance and repair.

The year-to-date total of 152,482 so far is also 2.9% below the number of registrations from January through August 2016, reported the organization. Despite that slight downturn, FENALCO still projects the year-long total in 2017 to be above the sum seen last year.

Chevrolet, the leading automotive brand in Colombia, accounted for 22.0% of the total in August. It was followed by Renault (20.3%), Nissan (8.8%), Kia (8.5%), and Mazda (7.6%). Together, these five leading brands represented 67.2% of the automobiles registered last month.

Compared to August 2016, Nissan showed the highest growth at 23.6%. Mazda was nearly steady (with 0.6% growth), while Renault (a drop of -2.1%), Chevrolet (-12.8%), and Kia (-20.6%) all had negative results.

Only Chevrolet had more vehicles registered in August than Renault, and the two companies combined to make up nearly half of all registrations in Colombia. (Photo credit: Jared Wade)

In terms of specific makes, the top five models registered so far this year in Colombia are Chevrolet Spark, Chevrolet Sail, Renault Sandero, Renault Logan, and Kia Picanto. The Sendero has seen the biggest improvement compared to its performance at this time last year, while the other four all showed declines in comparison to August 2016.

In terms of the types of vehicles registered, FENALCO divides the automobile industry in Colombia into various different categories: cars, utility vehicles, pickups, wagons, vans, freight cars, commercial cars, and taxis. Registrations for utility vehicles and pickups were the only categories that showed an increase in August. Utility vehicles recorded the largest growth in registrations, with a 7.8% uptick, while pickups increased their numbers by 5.0%.

Geographically, Bogotá continues to dominate the market. The capital contributed more than one-third (34.2%) of all registrations in August, while the next two largest Colombian cities, Medellín and Cali, accounted for 15.4% and 11.0%, respectively.

Bogotá and Medellín each showed a slight improvement, jumping 2.6% and 1.6% from the same month in 2016. Bucaramanga, the capital of the Santander department in eastern Colombia, had the biggest decline among large cities at -11.9%.

Automobiles were not the only transportation category to show disappointing numbers last number. Motorcycle buying has also been sluggish throughout 2017, with just 279,914 motos registered from January through the end of July. This is down 14.5% from the 327,613 registered from January through July in 2016.

The five most-registered brands of motorcycles this year in July were Bajaj, Yamaha, Honda, AKT, and Suzuki.

“You could say that this is a year of transition, and we are adjusting ourselves to a new reality.” – Juan Carlos González of Yamaha Incolmotos

Globally, Yamaha sold approximately 12 million motorcycles in 2016, bringing in around $8.3 billion USD in global sales. More than half the company’s sales came in Asia, where populations are huge, budgets are small, and streets are crowded.

Latin American, by contrast, represents just a small piece of the global pie, with about half a million motorcycle sold in the region. Brazil is the largest market in this part of the world and Colombia, where its business is done through Incolmotos Yamaha, comes in second. Add in Mexico and Argentina and those four countries account for about 80% of Yamaha’s sales in Latin America.

For a time, Colombia, with a population of around 50 million people and many motorcycle riders, represented a good location for expansion. But an economic downturn since 2014 has disrupted that story of growth, which Juan Carlos González, manager of production management at Incolmotos Yamaha, explains by looking back to last decade.

(Photo credit: Loren Moss)

Back around 2004, says González, there were really just four major players in the Colombian motorcycle market: Yamaha, Honda, Kawasaki, and Suzuki. But soon after, more competition started to enter the scene, with low-cost bikes from Chinese and Indian companies putting price pressure on the established sellers.

“In the Colombian market, the Japanese brands are not economical brands,” he said. “They are high-value brands, because their development and production — which in the beginning were completely in Japan — have a cost for quality.”

This didn’t change Yamaha’s operating strategy, however. The company, which operates from its main plant in the town of Girardota in Antioquia not far from Medellín, didn’t race to begin offering budget bikes. It was happy to instead position itself as the aspirational choice for many Colombians. Perhaps they would start out with a Chinese model, but in time they could trade up — with some dreaming of models like the R1M that has a retail list price of nearly $25,000 USD.

“It’s hard to acquire a Yamaha motorcycle,” said González. “Yamaha doesn’t have any economical motorcycles, and it isn’t going to have any either. Because to produce a motorcycle with the standards of quality of the Yamaha brand costs money, so it’s a perception of value.”

(Photo credit: Loren Moss)

Ultimately, he sees the introduction of the low-cost models as a benefit to the Colombian market. By definition, those new imports were competing for the same limited pool of bike riders as Yamaha. But the Japanese firm hasn’t lost any sizable market share over the past decade. In a way, the Chinese and Indian motorcycles were actually going up against public transportation and helping expand the market rather than taking customers away from Yamaha.

With new low-cost options, many Colombians earning low wages could, for the first time, validate buying a motorcycle rather than taking the bus or the metro, says González. And once they became a rider, they likely wouldn’t go back to the bus. On the contrary, they will likely start to consider buying a higher-end option in a few years when their paycheck improves and it’s time to make another purchase.

“The market has continued to contract.” – González

“For us, our aim is to have a minimum of 20% market share,” he said, stressing that Yamaha’s goal in Colombia is “to be visible” and provide financing options “so that, little by little, they can acquire our products with legal credit.”

This strategy hasn’t been smooth sailing, however. The Colombian economy is highly dependent upon oil, and when the price of a barrel of crude fell precipitously toward the end of 2014, it sent shockwaves throughout the economy. The peso lost about a third of its value within a year, inflation spiked, and consumer confidence began to wane. “Obviously, the market contracted,” said González.

The administration of President Juan Manuel Santos and Colombian Congress also passed a tax reform late last year that increased the nationwide value-added tax (VAT) from 16% to 19%. This has strained margins, and he says that Yamaha’s Colombian operations have overall effectively suffered around a 50% currency devaluation to their bike sales price over three years.

(Photo credit: Loren Moss)

“We have not passed on all that devaluation that we suffered to the public price,” he said. “We made improvements in our internal offices, negotiations with suppliers, and some was passed on. We passed on only about 15% or 18%.”

The entire market has felt the effects. “There are items in the economy that are out of reach because first you have to subsist,” he said. “You have to buy food, you have to have clothes, you have to pay for education, and then come the other expenses which in some cases can be considered a luxury item, like a motorcycle. That’s why the market has continued to contract.”

It hasn’t all been bad. Amid the downturn, Yamaha has looked to find new customers.

Of the roughly seven million motorcycle riders in Colombia, nearly one-third are women, according to Incolmotos. The percentage hasn’t always been that high, and the company has specifically tried to target this market in recent years by producing smaller bikes suited to their needs and offering safe-driving education resources to help women feel more comfortable in the crowded roads of cities like Medellín and Bogotá.

Incolmotos, as it showcased at the Feria de las Dos Ruedas motorcycle fair in Medellín in May, now offers at least four scooters in Colombia as well as several small, sporty bikes, like the Líbero 125 and SZ-RR, that can be bought for around $1,500 USD. “Women slowly have dared more and more to become more autonomous in their transport, and that’s why these scooter-type motorcycles are so important,” said González.

(Photo credit: Loren Moss)

The company is also benefiting from operational improvements made earlier this decade, said Alba Lucia Yara, who is in charge of the development of local parts for Incolmotos Yamaha. The company formed an alliance with the assembly companies of two other Japanese brands, Honda and Suzuki, to start a training program in 2010. This also included partnering with the National Service of Learning (SENA), a public institution in Colombia that looks to provide workers with in-the-field professional development.

Colombian law mandates that a certain percentage — at least 17% — of the vehicle must be locally produced in order to avoid a hefty 25% tariff.

The Colombian public science agency Colciencias has also played a role in improvements. By incorporating innovative production methods into the plant, such as aluminum injection technology and better mold casting, it has helped save costs on imported products.

Others in the wider assembly industry, including Renault and Mitsubishi, were receptive to collaborations as well, and the Medellín-based startup accelerator Ruta N has worked with this network to promote competitiveness, innovation, and shared research.

This isn’t solely for efficiency gains. Colombian law mandates that a certain percentage — at least 17% — of the vehicle must be locally produced in order to avoid a hefty 25% tariff. According to González, if Yamaha imports a fully assembled motorcycle — known as “completely built up” — then the bike is subject to both the 19% value-added tax and the tariff.

On the other hand, if it comes “completely knocked down” and is then assembled in Colombia along with locally produced parts, that import tax only amounts to 3%. The company, he says, often makes the built-up vs. knocked-down decision based upon expected sales volume of a specific model.

(Photo credit: Loren Moss)

If it is a super premium bike that will only sell a small number of units, then Yamaha may just import the bike from a plant in Asia and pass the extra cost on to the high-end consumer. But if sales will be significant, it makes sense to incorporate the assembly into its plant in Antioquia and then have a lower price point that will encourage more sales.

Increasing efficiency at its plant and maturity as a producer in the market is paying dividends, says the company.

Though it can vary case to case, González says that “the price goes down dramatically” and it is imperative that the plant maintains a 17% average of locally sourced work across its product line. “If you don’t comply with that 17% minimum on average…the fines are very, very high,” he said. “So you have to be very careful.”

Now, Incolmotos Yamaha produces many parts in Colombia that it previously imported, including chassis, suspension, steering forks, rear crank handles, lights, and footrests. “We work with competition and with other sectors in order to work towards some common interests,” said Lucia.

Increasing efficiency at its plant and maturity as a producer in the market is paying dividends, says the company. These aren’t glory days for anyone selling motorcycles in Colombia, but the executives are optimistic that the company is now set up better than ever to reap major rewards when the market turns back toward growth.

“The market has continued to contract, and has prevented the tendency towards growth from continuing,” said González. “You could say that this is a year of transition, and we are adjusting ourselves to a new reality.”

There is, of course, also a high-end market for the connoisseurs of the open road who see price as no object. Harley-Davidsons and BMW bikes can already be seen in the upper-class neighborhoods, and Ducati has increasingly been trying to connect with top clientele in this nation of nearly 50 million people.

Since the company has only been operating in Colombia for about five years, as a part of the Colwagen group of vehicles, it is still working to raise brand awareness. But no matter where you are in the world, the name Ducati speaks for itself.

To learn more about Ducati’s sales and experience in the Colombian market, Finance Colombia Executive Editor Loren Moss recently sat down for a conversation with Sergio Cordoba, commercial advisor at Ducati.

Cordoba, who showed off some of Ducati’s motorcycles at the Feria de las 2 Ruedas bike fair in Medellín in May, says that — just like everywhere across the globe — the Ducati client in Colombia is the consumer who “wants something from the high end that other people don’t have.”

Loren Moss: How is the Colombian market for a high-end motorcycle like Ducati?

Sergio Cordoba: Well, just like with all the worldwide brands, it has its clientele. Here in Colombia what matters a lot is the legal representation that the brand has. Let me explain: I mean the subject of sales, spare parts, services, and guarantees. That’s what matters the most here.

We make up a part of the Colwagen group, which is one the biggest automotive groups, so we have full coverage, and this given clients more guarantees. They can be happier about the subject of guarantees, accessories, and coverage.

Loren Moss: That’s very important. I remember a friend of mine in the United States had a car from Europe — a French brand that didn’t have a great presence — and I made fun of him by telling him “you’re going to have to order every spare part from France.” So, it’s very important.

Sergio Cordoba: It’s just the same here. The most important thing is the legal representation that it has.

Loren Moss: What is a client who buys a Ducati motorcycle here in Colombia looking for?

Sergio Cordoba: The top of the range. There’s no more room to move up. It’s like if you have a Mercedes and you move out into a supercar, for example, directly to a Ferrari.

It’s almost always going to be ahead in design, performance, and the cycling-skills aspects. Because they’re motorcycles made by motorcyclists for motorcyclists — unlike other brands.

Loren Moss: They’re all high end, but Ducati has various styles. Which one is the most popular in Colombia, and why?

Sergio Cordoba: The scramblers, because of their convenience and the dimensions of the motorcycle for the purposes of urban transport. It’s a motorcycle that performs very well.

And the Multistrada because it’s a touring motorcycle — and this country is perfect for touring because of the roads, tight curves, dips, and off-roading. They’re all ideal for that.

In the end, the subject of sporty-ness will always be present most of all in Ducati. Because that is its main DNA.

Loren Moss: Right, right. I haven’t seen the super-big models — those that compete with the Harleys — like the Diavel here in Colombia. I actually don’t know if Ducati still makes Diavels.

Sergio Cordoba: Yes, of course. They still have them, but unfortunately there have been very good sales of motorcycles, and we didn’t have enough units to bring any here for the fair.

Loren Moss: Ducati is increasing its presence here. How does stagnation in the Colombian economy affect the aspect of sales at that high-end level?

Sergio Cordoba: That really doesn’t affect us so much, because the high end — the Ducati customer — are people with a different profile to other people. They are usually successful professionals — people with money — so that has really affected very little.

They can cost $300,000. That’s a top brand. In Colombia, Ducati hasn’t been affected so much as far as the clientele is concerned. But it does affect the price, because there’s a high variation in the exchange rate of the dollar. It is not very stable. One day it’s worth more and the next day it’s worth less.

That means there’s variation in the price, but the Ducati client wants something from the high end that other people don’t have. A Ducati offers you that: exclusiveness.

Loren Moss: Yes, fascinating. So, the sales points are typically within the main cities, I imagine?

Sergio Cordoba: Yes, in Bogotá, Cali and Medellín. For the moment, because we’ve only been in the country for four or five years as a Colwagen brand, people are just getting to know the brand. So for that reason it has had slightly slower growth.

Photo credit: Loren Moss

The bank said that these reduced rates apply for both new and used home financing, including mortgages offered under the Vivienda de Interés Social (VIS) program.

So far this year, Bancolombia says that it has approved nearly 1.4 trillion pesos ($480, million USD) in mortgages and sees the rate drop as part of a larger effort to help grease the wheels of a Colombian economy that has seen slow growth in recent years.

On top of the mortgage rate reduction, the bank reported that is has also lowered rates on credit cards (by 100 basis points on all transactions) and vehicle loans under its Sufi brand.

“One of the sectors that moves the economy the most is the automobile, and during the first months of this year the market has decreased compared to 2016,” said Juan Carlos Mora, president of Bancolombia. “That is why, from Sufi, we have decided to lower credit rates for new or used vehicles from 0.95%.”

The president added that, collectively, the rate reductions will make credit financing accessible to more Colombians and add “an important boost” to the nation’s economy.

Photo: Juan Carlos Mora, president of Bancolombia, says that the reduction in rates for mortgages, auto loans, and credit cards will provide “an important boost” for the Colombian economy. (Credit: Bancolombia)