As in the U.S., purchase decisions by Costa Ricans are based generally on comparisons of price, quality and technical specifications, convenience and the availability of local product support or after-sale service. U.S. exporters to Costa Rica must be willing to make smaller sales than those to which they may be accustomed in larger markets (Costa Rica's GDP is roughly US$79 billion, with a population of approximately 5 million people).
Sales catalogs and brochures should be translated into Spanish or have webpages available in Spanish. Products must be price-competitive. Terms of payment for purchases above four thousand dollars are generally transacted through irrevocable letters of credit. Open account payment terms are reserved generally for well-known and well established customers. Insurance on accounts receivable is available through the Export-Import Bank of the United States. Payment for small purchases is usually direct.
Business in Costa Rica, as in other Latin American countries, is conducted and based on the establishment of personal relationships. The Costa Rican business community places great importance on personal contacts with foreign suppliers. A patient sales approach is preferred to a hard sell approach. Rushing to close a business in seen as aggressive, and may end up upsetting the customer. New U.S. suppliers/exporters should be prepared to travel to Costa Rica periodically and follow-up with customers regularly through contacts by telephone, Skype and/or e-mail. Again, U.S. firms can maximize their export sales possibilities and longevity in the Costa Rican market through a local representative.
I 52 I
Market Entry
Current Market Trends & Demand
The Costa Rican Government does not impose any non-tariff barriers on automotive, neither to the importation of remanufacture, rebuild, and/or used motor vehicle parts.
Costa Rican tariffs do not distinguish between used auto parts, rebuild auto parts or new parts. Tariffs on motor vehicle parts are calculated based on the c.i.f. (cos-invoice value, insurance and freight) value.
Currently, it was reported that under reporting invoices to evade import taxes is a problem within the auto parts participants, but it has been hard to report and eradicate.
Barriers
Costa Rica’s automotive park has a median age of 16 years old. Personal use cars have an even older figure: 18 years. Cargo Trucks have a 19-year-old average. Trucks transporting dangerous substances are in average 24 years old. Taxis have an average of 10 years and buses, seven.
market entry