The elimination of import quotas and the reduction of tariffs for new cars is sending shock waves through Ecuador’s used car market. According to dealers, prices have dropped 9% to 15% since the beginning of the year and will probably drop more.
Because of import quotas and tariffs, used car prices in Ecuador have traditionally been among the highest in Latin America. In some cases, buyers have been paying two times as much as they would in the U.S. or Canadian market.
That has suddenly changed, dealers say.
According to Juan Esteban, general manager of used car seller Patiotuerca in Quito, his sales are down 40% since the beginning of year. “Because of the EU trade agreement, it has become more attractive for some consumers to buy new cars,” he says.
Another factor affecting the used car market he says, is the continuing recession and difficulty of obtaining credit. “The market was poor before the EU deal but now it is very bad,” he says.
Even customers with cash in hand are reluctant to buy under current conditions. “It is taking two to three times as long to sell a car as it did last year,” says Esteban. “Everyone is waiting to see if prices will go lower. This is a very unsettled time.”
In Ecuador, about 70% of used cars are sold on 700 to 800 formal and informal outdoor courtyards, which are particularly active on weekends. The rest are sold by dealers who take used car as trade ins for new cars.