I CAN’T DRIVE 65

Panama 2014 | INDUSTRY | FOCUS: AUTO SECTOR

Although Panama relies on imports for all of its automotive needs; rising car sales and the subsequent congestion and infrastructure requirements keep the automotive industry at the forefront of planners' minds.

Due to its small population and low cost of transportation, Panama lacks an indigenous car-manufacturing sector. This fact has not stopped the country's auto sector from developing some interesting nuances that set it apart from its neighbors. At the end of November 2013, the total number of vehicles in Panama was 998,500, according to reports published by the Land Transport and Transit Authority (ATTT). By the end of 2013, this number had surpassed the one million mark. While car sales were unusually strong last year, sales in 2014 are slower. New car sales growth during 1H2014 was at 5.6%, which was well below last year's rate of 14.8% during the same time period. The strong performers during 1H2014 were buses, with 1,027 units sold, representing a 70% YoY increase, followed by minivans, at 443 units and a 23.7% YoY growth, and 1,369 luxury cars representing a 11.4% YoY increase in sales. That said, the two highest selling vehicle types by volume were 12,646 sedan style cars, and 7,413 SUVs, with sales rising by 5.3% and 1.3% respectively in 2014.

The last few years have also seen Asian car manufacturers establish their dominance in the Panama car market. Of the 10 most popular car brands in terms of sales during the first eight months of 2014, Asian brands accounted for 92.4% of sales, with Toyota coming out on top with 9,046 units. Ford Motors, the only American brand on the list, moved a much smaller 1,131 units during the same time period. And while Toyota dominated overall sales in Panama, Hyundai delivered the most successful model, its Accent, which sold 324 units. Total sales during the period reached 36,190 units according to the Association of Automobile Dealers Panama (ADAP).

STUCK IN THE MIDDLE

As more and more cares roll off dealership lots in Panama, the situation is causing serious congestion, especially in heavily trafficked urban areas such as Panama City and Colón. In spite of new road construction projects like the coastal beltway, completed at a cost of $189 million in 2009, road traffic is vastly outpacing infrastructure growth. In 2012, Panama's Chamber of Commerce, Industry, and Agriculture reported that congestion was costing businesses around a million dollars per day. The boom in car sales during the subsequent years has only exacerbated these costs and frustrations. In a poll conducted by La Prensa, a local newspaper, 54.4% of passengers said that they lost two to three hours traveling in Panama City every day, with others complaining of even longer commutes. While the introduction of the new metro line is expected to alleviate some of the congestion, continued investment in alternative forms of public transport will be necessary as car ownership ramps up.

RUNNING WITH THE DEVIL

In decades past, one of the most visually striking symbols of life in Panama was it's elaborately painted, privately owned and operated public buses, which locals referred to as the “Red Devils." The buses—many of which were purchased used from school districts in Florida—careened throughout Panama, delivering passengers and inciting the opprobrium of concerned politicians such as former President Martinelli, who railed that, “they will race from one end of the city to the other, killing people, killing themselves." Now these buses are being phased out in favor of new uniform metro buses. And while the new bus system has attracted some criticism over pricing and timeliness, the numbers are in its favor. The much-lauded new metro line, which opened in 2014, should help ease congestion. But a report by the CATO institute showed that buses were far more effective, especially considering the specifics of Panama City. While the Metro Line 1 can move a maximum of 6,400 passengers per hour, transit buses can move over 10,000 passengers per hour on city streets. When the overall costs of the two systems are compared, the comparative advantage of Panama's bus network becomes even more pronounced. Ultimately, the city will integrate a combination of the two systems. But planners would do well to not ignore the less glamorous but highly practical bus network.