Overview

Table: Automotive Parts Market Size, million USD

	2019	2020	2021	2022 estimated
Total Exports	12.3	11.5	20.9	20.20
Total Imports	289.5	243.7	383.6	387.4
Imports from the US	45.6	34.6	51.4	52.4
Total Market Size	277.1	232.2	362.27	366.27
Exchange Rates	US Dollar	US Dollar	US Dollar	US Dollar

Source: Central Reserve Bank of El Salvador and U.S. Department of Commerce, Bureau of Census, Foreign Trade Division TPIS Database: USHS Exports. Note: No reliable source for local production of auto parts.  

The United States is the most significant player in El Salvador’s auto parts and accessories aftermarket. Auto parts imports from the U.S. in 2021 experienced a positive increase, and industry leaders remain confident and expect higher growth in the coming year. U.S. companies enjoy a reputation for high-quality products with excellent warranties.

In 2022, the Vice Minister of Transportation reported that the total number of vehicles in circulation in El Salvador is 1,539,502, out of which approximately 40% are concentrated in the capital city of San Salvador. Vehicles in circulation increased by 6% in 2022 versus the previous year. Unreliable, unsafe, and inefficient public transportation and a desire to mitigate Covid-19 exposure have increased demand. Ride-sharing services such as Uber and Lyft are popular. Vehicles by type are distributed as follows: 678,160 automobiles, 228,666 pick-ups, 460,072 motorcycles, 44,732 heavy trucks, 43,188 light trucks, 22,061 minibuses, 7,363 buses, 15,332 panels, 11,909 truck heads and 15,169 trailers; 81 ambulances, and 12,000+ of an unspecified type.

Leading automotive brands in the market include Audi, Porsche, Nissan, Honda, Hyundai, Kia, Toyota, Chevrolet, Mitsubishi Motors, BMW, Hino, Daihatsu, Isuzu, Jeep, Ford, Dodge, Mazda, VW, and Peugeot.

El Salvador’s auto parts sector is highly competitive and price sensitive. Asian companies have gained market share as the number of Japanese, Korean, and Chinese auto manufacturers continue to grow in El Salvador. Three countries (Colombia, Brazil, and Germany) make up a third of imports but do not yet threaten the dominant position of imports held by the United States. Taiwanese companies are known for their ability to compete on price and are positioned to take a more significant share of the import market. A partial list of automotive product brands currently in the market includes TSI Supercool, B’Laster, Amalie, ArmorAll, Turtle Wax, Mobil Oil, Goodyear, Bendix, Alloy International, Die Hard, BF Goodrich, Dayco, STP, Fleetguard, Castrol, Champion Spark Plug, American Quality Lubricant, Federal-Mogul, Pennzoil, Preston, Gates, Smitty’s Supply, among others. 

Most end users of auto parts and accessories are owners of mechanic and repair shops and individual vehicle owners who prefer to purchase auto parts and accessories directly from the distributor/retailer. Salvadoran distributors are highly receptive to U.S. products. Many executives speak English and are familiar with U.S. business practices. Moreover, El Salvador’s geographic proximity to the United States provides greater access to U.S. companies and faster inventory delivery than Asian companies. The breakdown of end-users is as follows:

• Freight and passenger transportation companies
• Repair and maintenance shops
• Service stations, gasoline dealers, and lubricant centers
• Government agencies
• Other end-users: car rentals and cargo companies

Companies that seek to do business in El Salvador should work closely with a local distributor. Assigning one distributor for the size and demand of the country is appropriate. A potential Salvadoran distributor may handle various products and often seeks an exclusive distributorship. After conducting comprehensive due diligence and establishing a solid business relationship with a potential partner, U.S. companies should consider using letters of credit, extending lines of credit, or the Small Business Administration (SBA) financing programs. The breakdown of distribution channels is as follows:

• Importers and distributors of automotive parts and accessories  
• Tire distributors  
• Wholesalers  

Leading Sub-Sectors

The top opportunities include spare and replacement parts for gasoline and diesel motors, including:

• Radial Tires
• Electric accumulators
• New pneumatic tires of rubber
• Oil petrol-filters for internal combustion engines
• Lubricants
• Fuel pumps
• Radiators
• Bumpers
• Sparking plugs
• Used tires
• Steering boxes
• Safety products: alarms, GPS
• Diagnostic equipment
• Tools and compressors 

Service and Repair 

Automotive accessories are a niche market in El Salvador and “tune-up” is now a very well-known term. Exterior modifications have increased the demand for accessories and parts such as front and rear bumpers, splitters, lightweight wheels, and spoilers. There are no restrictions on customizing vehicles in El Salvador. Consumers like to customize wheels and rims, auto sound and alarms, spoilers, and LED taillights, among other modifications. Repair shops are seeking current-generation diagnostic equipment. Tools for technical maintenance include diagnostic software, scanners, electronic measure systems, and pneumatic tools, among others. Shops that handle collision repair need welding equipment, cutting tools, adhesives, glass repair kits, spray guns, batch ovens, glass protection films, and other equipment related to body repair.

Public transportation (buses) and heavy-duty transportation (trucks) are the primary end users of remanufactured parts. Remanufacturers also import and distribute new and used parts, these include: Blue Bird, International, American Motors, Mercedes Benz, and Hyundai. 

Electric and Hybrid Vehicles 

El Salvador’s Law for the Promotion and Incentives to Import Electric and Hybrid Vehicles, approved in September 2020, includes a tax reduction for importing electric vehicles and all the regulations for electric mobility. Under this regulation, a 0% custom duty is established for electric and hybrid vehicles and importers are exempt from paying the 13% Value Added Tax (VAT) on the importation value, as well as the Special Tax on the First Registration of Goods. This brings opportunities for U.S. electric mobility companies and suppliers of batteries, electric charging stations, and smart mobility accessories. In August 2022, the Legislative Assembly approved reforms to the Law for the Promotion and Incentives for the Import and Use of Electric and Hybrid Means of Transport. Among the amendments to the law is the possibility of importing used electric and hybrid cars up to seven years old with an old battery. The law also implies that for ten years, the payment of the Tax on the Transfer of Movable Goods and Services (VAT) is waived for the importation of new electric and hybrid vehicles, while used electric and hybrid vehicles will have a deduction of 25%. Even though the reforms were passed by the Legislative Assembly, they will only be applied once they are officially published in the Diario Oficial, which is still pending as of October 2022.

Energy companies are progressively replacing combustion vehicles with state-of-the-art 100% electric cars. Currently, AES Corporation El Salvador has seven vehicles in operation: three in the eastern zone, two in the western area, and the same in the central zone. Likewise, AES is installing a network of electric vehicle charging stations nationwide. The company has a fleet of 15 electric cars and 12 EV charging stations. DELSUR, an electricity distribution company, was the first company to promote electric mobility and has imported an electric vehicle. They have also installed a public electric charging station in Colonia Layco, San Salvador.

Opportunities

Due to the supply chain disruptions impacting the automotive industry, there is an increase in the demand for products from the U.S. This is an excellent opportunity for U.S. companies to enter the market.

Import tariffs for auto parts under HTC 8708 and most vehicle accessories under HTC 8714 were automatically reduced to zero after the CAFTA-DR implementation. U.S. brands are always in high demand by Salvadoran distributors who are looking for innovation, high quality, durability, warranty, and fast delivery.

Currently, 90% of used vehicles purchased in El Salvador are imported from the United States, and many are salvaged cars bought at auctions. The salvaged vehicles are then repaired and sold in the local market. Auto repair shops play a crucial role in influencing customers purchasing decisions.

The Vice Minister of Transportation announced that the Government of El Salvador is looking for options to finance and renew the fleet of 10,000 public buses. The Vice Ministry is also exploring opportunities to slowly replace the gas public buses with electric units, which will bring opportunities for electric auto parts in the future.

Resources

Government contact:

• Vice Ministry of Transportation (VMT)   

Two associations represent the interests of the automotive sector:

• Salvadoran Association of Auto Parts Importers (ASIRA) 
• Salvadoran Association of Distributors of Vehicles (ASALVE)  

Other companies involved in the electric vehicle emerging market:  

• AES El Salvador
• DELSUR

Participating in U.S. trade shows is an excellent opportunity for U.S. companies to meet Salvadoran buyers. The U.S. Commercial Service in Central America annually leads a buyer delegation to: 

• The Automotive Aftermarket Industry Week (AAIW): SEMA and AAPEX shows in Las Vegas, N.V, November 1-4, 2022 

Interested parties may contact Commercial Assistant Sandra Hernandez at sandra.hernandez@trade.gov