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Korean cars dominate Dominican market

The SUVs are the most sold in the country

SANTO DOMINGO. The preference of Dominicans when they elect the type of vehicle that they want to buy is becoming more diversified all the time, closing gaps between traditional brands and others which years ago were not so common in the market, but have experience large growth in the vehicular market.

Japan, as the country of origin of the majority of the vehicles that are used in the country was displaced this year and moved to second place. Korea took over first place with the country importing thousands of vehicles that operate with LPG, an fuel which sells for RD$108.50 per gallon, while gasoline is at RD$249.40 for premium and RD$234.80 for regular. The gallon of diesel is not at RD$219.70.

According to data from the Association of Concessionaires of Vehicle Manufacturers (Acofave), the estimated number of sales of new vehicles during 2013 was 18,997 units. Of these 5,363 were Korean vehicles, 5.031 were Japanese. In third and fourth place were the United States and China, with 1,877 and 1,229 respectively. All the while Germany is in fifth place with a total of 1.105 vehicles sold.

Acofave stresses that in the case of China, which is in fourth place, when a few years ago these vehicles did not even exist on the market.

From Japan comes the well known brands of Toyota, Honda and Nissan, which for years have been the most popular among Dominicans, due to their quality and the ease of obtaining parts; and from Korea comes the Hyundai and the Kia, the two brands with the greatest growth in imports over the last few years.

For example, in 2011 the vehicle importers brought 57,663 vehicles, both new and used, of which 10,620 were Toyota; 6,261 were Honda; 5,731 were Ford, 5,667 were Hyundai; 4,259 were Nissan, 3,181 were Chevrolet and 2,128 were Kia. This list only mentions those marks with more than 2,000 units imported and is based on statistical data from the National Association of New and Used Vehicle Importers (Anadive).

For 2012, the amount of Toyotas imported was 10,761, barely 141 units more than the year before. For Honda, there were 6,596, some 335 units more than in 2011. Nevertheless, Hyundai went up to third place, displacing Ford, with a total of 6,474 units for an increase of 807 more units than the year before. Ford fell to 3,965.

The Kia brand rose from seventh place to fifth with a total of 3,198 units a difference of 1,070 vehicles.

Cesar de los Santos, the Anadive president explains that the Korean brands enjoy great acceptance due to the fact that their prices in the market are more accessible. He refers to the fact that above all the cars that come equipped for using LPG. "Those are vehicles which in the majority are used and come for the middle class market and are sold cheaper," he noted. He also mentioned the case of the American cars, which due to their import are covered under the DR-CAFTA free trade agreement, come into the country duty free, which means a lower sales price to the public and therefore is an attraction for the client.

More economical

Anabelgica Guichardo lasted a couple of years with a Jeep-type vehicle, until a little more than a month ago she decided to change it for a more economical model. Her monthly fuel bill was not sustainable: RD$21,000 a month. After analyzing the market, she opted for a relatively new brand in the country, but which now receives a large amount of space in the dealers' lots.

Her car is a Sonata, from Hyundai, with which she says lowered her fuel costs to half. Each week she spends some RD$1,800 in LPG, which the vehicle uses, and this adds up to RD$7,200 a month.

Besides the economy, Guichardo says she feels more secure since this vehicle has an LPG system that is factory installed, which-in her opinion-is safer than those that are adapted to LPG.

Salesmen from several dealers that were visited, both in the capital as well as in La Vega and Moca, indicated that this type of car is currently the one most in demand.

The most used types

In spite of the fact that they are the ones which consume the most fuel and the cost of fuel is a constant complaint, the SUVs continued to be the most popular in the country.

Of the new car sales this year, 6,841 (41%) were of this type; 2,681 (19.4%) were pickups; 2,887 (19.4%) cars were sold; 1,081 (7%) in truck sales; 1,478 (9.54%) delivery vehicles; 85 (0.55%) minivans; 408 (2.61%) micro buses were sold; 218 (1.4%) minibuses and 48 (0.30%) full-size buses.

A reduction in sales

Besides the change in the preference in brands, this year the vehicle market was characterized by a slowdown in sales, which according to the representatives of the sector is around 15% to 20% with regards to 2012.

Enrique Fernandez, the Acofave president, recalled that during the middle of this year the tendency was downward at a 30% rate but thanks to the "auto fairs" at the end of the year, both that of the Banco Popular and BanReservas, the blow "was softened." Last year the new car sales reached 22.636 units against the 18,977 units expected to be sold this year.

The causes (for the slowdown in sales) are the "fiscal reform which increased the taxes on vehicles from 16% to 18% (ITBIS) and from 17% to 20% the cost of the first license plate and the cooling off of the economy and the reduction in the growth rate in general."

Tax collections down

The slowdown in the sales of vehicles was also felt in the reduction of the tax collections by the state for these sales. The preliminary figures from the Director General of Internal Taxes indicate that the taxes for the registration of the first license plate were as of last November, RD$4.127 billion, 7.5% less that what had been projected for the year, which was RD$4.459 billion.

In the case of the tax for circulation (the "marbete" or sticker), the fall off was about 75%, as they collected barely RD$616.2 million when the projections were for RD$2.5 billion.

The DGII explained that the great reduction was the result of the fact that the estimates were based on the 1% Vehicle Circulation tax which was programmed for this year, starting in October, but which was set back by presidential decision. President Danilo Medina responded to the great opposition which a broad sector of the population voiced.

Another cause which justifies the reduction of tax collections is the fact that this year the operation for the sale of the sticker began in November and still, at the beginning of December less than 50% of the vehicle owners have bought the new stickers.