Overall sales across 10 Caribbean and Central American automotive markets set to surpass 300,000 units by 2030, with battery electric vehicles (BEVs) doubling their share from current levels.
The combination of Chinese OEMs’ expansion, digital sales strategies, and growing consumer interest in electric vehicles (EVs) suggests that the Caribbean and Central American automotive markets are on the brink of a major transformation between 2024 and 2030. By addressing infrastructure and regulatory challenges and embracing digital transformation, the region is on course to fully capitalize on the opportunities that lie ahead.
As Chinese OEMs, particularly BYD, expand aggressively into the region, traditional players such as Toyota, Hyundai, and Nissan are being challenged in the entry-level EV segment. The introduction of battery electric vehicles (BEVs), along with hybrid models, is accelerating, as regional OEMs launch new models and import popular EVs from global markets. Several countries, including Costa Rica and Panama, are showing remarkable progress in EV adoption, marking a broader shift toward sustainable mobility.
Governments and private enterprises are, meanwhile, working together to enhance charging infrastructure, a critical component for widespread EV adoption. At the same time, the shift toward digital retailing and online dealerships is transforming how consumers interact with automotive brands. Long-term financing options, such as extended loans, are also boosting accessibility to EVs, further propelling market growth.
To learn more, please see: Caribbean and Central American Automotive Outlook, 2024, or contact sathyanarayanak@frost.com for information on a private briefing.
Backed by Chinese OEM Expansion Strategies, xEVs Gather Momentum
In 2023, Chinese OEMs made substantial inroads into the Caribbean and Central American markets, with a particular focus on Panama, Costa Rica, Honduras, and the Dominican Republic. BYD has emerged as the frontrunner, forming strategic partnerships such as its collaboration with ATL Automotive to expand its presence in the region. Partnerships such as this are set to allow Chinese OEMs to leverage local dealership networks and offer a broader range of vehicles at competitive prices, placing significant pressure on established Japanese and Korean brands.
Chinese OEMs have gained significant traction due to their aggressive product line expansion and competitive pricing, especially in the BEV segment. Costa Rica, in particular, has seen a notable surge in EV sales, with 25% of all unit sales in 2023 coming from xEVs. However, this growth is not solely driven by local policies; rather, it is largely a result of Chinese OEMs introducing affordable, feature-rich EV models that appeal to a wide demographic.
In terms of overall automotive sales, Panama is projected to surpass 50,000 units by 2024, joining Costa Rica as a leader in the region. Other countries, including the Dominican Republic and Guatemala, are also targeting this milestone but may fall short. Nonetheless, the broader market is on track to exceed 300,000 units by 2030, with BEVs projected to double their current market share during this period.
The demand for SUVs and light trucks remains strong, a trend expected to persist throughout the decade. By 2030, SUVs are anticipated to account for 50% of total vehicle sales, driven by stable fuel prices and favorable banking and financial services. This shift toward larger vehicles aligns with global trends and reflects consumer preferences for versatility and comfort.
Although Chinese OEMs will lead the initial push toward EV adoption, legacy OEMs are also ramping up their efforts. As hybrid electric vehicles (HEVs) gain popularity, their adoption in the Caribbean and Central America is expected to increase post-2026. The shift from internal combustion engine (ICE) vehicles to xEVs will likely gather momentum as consumers become more environmentally conscious and fuel efficiency becomes a priority.
Another significant trend that will shape market prospects is the shift toward digital and contactless sales. Dealerships and OEMs are increasingly adopting online retail strategies to reach tech-savvy consumers who prefer the convenience of digital platforms. This transformation is reshaping how vehicles are marketed and sold, offering consumers the ability to explore digital catalogs, use augmented reality to visualize vehicles, and complete purchases online.
Automated purchasing processes are expected to play a key role in improving customer experience. Features like digital contracts, search tools, and virtual financing options will streamline the buying process, making it faster and more efficient. As more consumers become comfortable with digital transactions, automotive companies that embrace these technologies will gain a competitive edge in the market.
Our Perspective
The entry of Chinese OEMs into the Caribbean and Central American markets is a game-changer for the region’s automotive market. Companies like BYD are rapidly expanding their presence, and their dominance in the BEV segment is expected to grow significantly by 2030. Tesla’s anticipated entry into the region will introduce a new level of competition, likely driving further innovation and expansion in the EV market.
By 2030, most countries in the region, with the exception of slower-growth markets like El Salvador and Jamaica, will see considerable increases in vehicle sales, particularly in the EV segment. While the current EV market remains uneven, with some countries just beginning to introduce electric models, the next decade will likely see sales more than double. The affordability and reliability of Chinese EVs will play a crucial role in this growth, as these vehicles offer consumers a viable alternative to traditional ICE models.
While the outlook for EV adoption is positive, several challenges remain, particularly in the development of charging infrastructure. Without adequate facilities, the widespread adoption of BEVs could be hindered. Governments and private companies will need to invest in comprehensive charging networks to ensure that EVs are a feasible option for all consumers.
Regulatory policies that incentivize the use of alternative fuels and provide tax exemptions for EVs will also be critical in making electric mobility more accessible. Governments across the region will need to focus on creating favorable conditions for EV adoption. This includes reducing import taxes on EVs, standardizing vehicle regulations, and offering incentives for local production. By encouraging investment in local assembly and manufacturing, governments can reduce costs while boosting local economies. Additionally, promoting electric public transport through subsidies and benefits for operators will contribute to the overall sustainability of the automotive market.
As digital transformation continues to sweep across industries, the automotive market is no exception. Dealerships that adopt digital sales strategies will be better positioned to meet the evolving demands of consumers. The integration of augmented reality, virtual showrooms, and online financing will enhance the buying experience, making it easier for consumers to explore their options and make informed decisions.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
