Revving up business: Opportunity awaits for Canadian automotive suppliers looking to expand

Friday October 13, 2017
Written by Craig Rayner
Oct. 13, 2017 - In the context of an ever-changing global trade landscape, the Canadian automotive industry must ensure it has the knowledge and capability to trade across our border.

A recent study from UPS examined the purchasing behaviours of U.S. and Latin American small- and medium-sized automotive manufacturing importers, offering insights into how Canadian auto exporters can tap into the Latin American market and strengthen their relationships with importers.

The study looked deeper into these nine markets: Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Panama, Peru, and the United States.

A key finding of the 2017 UPS Business Monitor Export Index Latin America is that nearly half of Latin American automotive importers are looking for new international suppliers, suggesting there are many opportunities for Canadian automotive exporters to expand in the region.

There are four considerations that Canadian exporters need to think about:

1. Go where the buyers are
It might sound obvious, but when targeting automotive importers, exporters should aim to initiate trade in markets with a high propensity for imports. These are markets with existing trade agreements and local industries that are open to international competition. Generally, the countries with the highest propensity to import have the least developed domestic automotive manufacturing industries.

When it comes to Latin America’s automotive manufacturing industry, the study shows that Colombia, Costa Rica and Peru have the highest propensity for automotive imports.

2. Focus on what matters
The majority of Latin American automotive importers cited price, quality and logistics services as the three most important considerations when evaluating prospective vendors. While it’s no surprise that price and quality rank highest, the fact that logistics and shipping services ranks third reflects the importance of on time, seamless product delivery.

3. Seek local knowledge
Regardless of the sector, the report shows that an importer’s number one obstacle is delivery delays. Exporters need local knowledge to ensure they can customize logistics solutions and provide their customers with their product on time.

Simply put, the importance of logistics and shipping solutions provided by the vendor can’t be overstated. When pursuing new business, exporters can differentiate themselves by adopting a closer relationship with their buyers, developing a thorough understanding of local import regulations, and supplying logistics services to reduce delays and damaged products.

4. Expand your web
Although the automotive sector has one of the lowest proportions of importers looking to buy products online, the sector’s use of Internet search engines to find new suppliers was one of the highest compared to other sectors examined in the study, which included industrial manufacturing, apparel and high-tech industries. Importers placed high value on a prospective supplier’s website when evaluating them as a potential partner. Exporters should evaluate both their search engine optimization and their website when devising international promotion strategies for their products.  

There is a great deal of demand for automotive imports across Latin America — and knowing how to tackle this market is crucial for success. Overall, Canadian automotive exporters should focus on countries with the highest propensity to import, ensure their logistical services are customized to meet local needs, and bolster their online presence so buyers in these markets can find them.

The world is waiting. What are you waiting for?

The BMEI Study included interviews from 2,170 individuals responsible for international purchases from the following industries: Industrial Manufacturing, Automotive, Apparel and High-Tech. The study was conducted from November 2015 - February 2016 in nine countries including: Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Panama, Peru and the United States. A sample per country was defined based on the size ratio between each market with a margin of error between +/- 4.7 per cent and +/- 9.1 per cent.

Craig Rayner is the vice president of automotive at UPS Canada.

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