MANAGUA—If it seems like there are a lot more new cars and trucks on the roads these days in Nicaragua, that’s because there are.
The Nicaraguan Association of Automobile Distributors (ANDIVA) reports that imports of new vehicles increased by 18% in 2011, indicating a solid recovery for Nicaragua’s small but vibrant auto-dealer industry after the economic fender-bender of 2009, when new car sales plunged by 50 percent.
Overall, Nicaragua still sells the fewest new vehicles in all of Central America. This year, only 8,500 new cars and trucks were imported into the country, and 800 of those were government imports of Russian Ladas and buses from Mexico.
Still, 8,500 new cars, trucks and busses motoring around Nicaragua is a significant vehicular presence in a small country with even smaller roads, as anyone who drives in or out of Managua during rush hour can attest. Twenty years ago, Managua traffic was so sparse that even rush hour felt like a Sunday morning in some uninhabited post-apocalyptic urban wasteland. But after two decades of new car sales— 40,000 new vehicles sold over the past five years alone—the traffic in Managua is starting to feel like that of a proper city.
As Nicaragua’s economy continues its upward trudge—boosted by an infusion of Venezuelan cash, high commodity prices and record-setting export levels—the demand for new vehicles continues to grow at Nicaragua’s 12 authorized car dealerships, according to Sergio Mantica, president of ANDIVA and manager of Nicaragua’s Isuzu dealership.
Even though it seems like the streets of Managua are suddenly cluttered with new SUVs, Mantica says the greatest demand is for small and midsized sedan models, followed by pickup trucks.
In fact, demand is greater than supply these days, due to production delays in Japan earlier this year (due to the earthquake and tsunami) and expected delays from truck manufacturers in Thailand due to recent flooding there. Mantica says the waitlist for most new vehicles at many dealerships is until January or February.
Mahindra making headway
Indian manufacturer Mahindra has become one of the fastest-growing vehicle names on the Nicaraguan market.
The boxy and rugged-looking Mahindra 4×4 trucks and pickups, distributed by Casa Pellas, have more bed space and interior room than their competitors. And at $22,000, they sell for nearly $10,000 less than the more popular Toyota trucks, which still top the list of most popular new vehicles in Nicaragua.
Mahindra is now the third-best selling pickup truck on the Nicaraguan market, after only four years in the country.
“The price, the quality and the full backing (3-year, 100,000-kilometer warranty) from Casa Pellas make the Mahindra a good work truck,” says José Antonio Solís, sales director for Mahindra.
Solís says clients are also attracted to Mahindra’s rugged body, inspired by the old Willys Jeep, which Mahindra manufactured in India in the late 1940s. Though the Mahindra is more of a no-frills general-purpose utility vehicle than other more comfortable pickups, such as the Toyota, Nissan and Chevy models (which come with airbags, GPS and ABS break systems), a lot of buyers like the “rustic and tough” feel of the car, Solís says.
Plus, he said, Mahindra’s don’t come with fancy internal computer systems that are difficult to fix when they eventually go haywire. Spare parts are not impossible to find, Solís said.
“These trucks have been tested and they are here to stay,” Solís said.
Perhaps the biggest factor contributing to Nicaragua’s recovering auto-sales industry is the new financing options being offered by local banks.
Nicaraguan banks are now offering a fixed rate of 6.99% financing for the first year, which feels like zero percent to Nicaraguan clients who are used to paying 15-20%. Loan experts say those rates, which are based off prime rates in the U.S., probably won’t go any lower. So now’s a good time to buy a new vehicle.
Banks and dealerships are also teaming up to throw in other perks, such as one year of free car insurance, free Texaco fill-up cards, or free GPS anti-theft systems with new purchases.
Buyers are reacting. Eduardo López, a sales manager for BanPro says Nicaraguans are reacting to 6.99% financing rates more eagerly than American buyers react to 0% financing. López just moved to Managua from California, where he was working with Wells Fargo. He says the car market in Nicaragua is better than it is in the U.S. these days.
“At Wells Fargo, we were giving out about one new car loan a day, but at BanPro we are doing five or six a day,” López said.
Nicaraguan banks, he said, are more liquid than ever, so they’re eager to lend and invest in the economy.
As long as the lending and buying continues, expect traffic delays.