Colombian wholesale vehicles sales in 2008 fell for the first time since 1999 as higher gasoline prices, increased interest rates and the peso depreciation discouraged buyers from purchasing cars.

Vehicle sales fell 16% to 217,048 units in 2008 from 2007, when 258,413 vehicles were sold, according to data released by industry group Comite Automotor on Monday. Car sales had hit an all-time record in 2007.

The drop in car sales is the first since the economy entered into recession in 1999, when Colombia sold 57,257 units, about half the 109,375 units sold in the previous year.

Nicolas Urrea, marketing director of Los Coches - one of Colombia's largest car dealers - said the peso depreciation, higher gasoline prices and skyrocketing licenses to operate trailers and buses discouraged buyers.

"Colombians went crazy buying imported cars at the beginning of the year, but when the peso began depreciating that trend changed completely," Urrea told Dow Jones Newswires.

The Colombian peso appreciated 22% against the dollar in the first six months of the year, hitting its strongest level in nine years, but then it weakened following the world financial meltdown, ending the year with a depreciation of 16% compared with December 2007.

Regular Colombians also bought fewer vehicles as gasoline prices rose an average of 1% each month as the government kept phasing out gasoline subsidies, Urrea added.

Additionally, the government decided to increase the amount charged for a license to operate a new truck or bus, discouraging even more potential buyers.

"In 2007, when a trailer was entering into the economy, the buyer had to pay the government a license of 20 million Colombian pesos [$8,966]. Last year, that same license cost COP50 million. That discouraged strongly the purchase of heavy cars," Urrea said.

Colombians also bought fewer cars last year as a result of higher interest rates as the central bank gradually increased its key rate - to 10% in July from the 6% of 2006 - in a bid to stop inflationary pressures, said Arnoldo Casas, head of research at local brokerage Profesionales de Bolsa.

In late December, the central bank cut its key rate to 9.5%, citing the economic slowdown and changing its monetary policy.

In the four years ending with 2007, car sales rose at a pace faster than 20% as a strong peso and lower interest rates encouraged people to buy vehicles.

Car sales are expected to keep falling this year as Colombians will refrain from buying a new car or replacing their old vehicles amid an economic deceleration. Urrea expects the industry will sell around 200,000 vehicles in 2009, down 8% from 2008.

The Colombian economy is expected to decelerate by 3%, down from an initial estimate of 3.5%, according to the finance ministry.

"This year, Colombians will think twice before buying a car because they're afraid of losing their jobs," Urrea added.

General Motors Corp. (GM) topped the sales rankings in 2008 with 77,754 units, down from 95,124 in 2007.

French car maker Renault (13190.FR) took the No 2. spot, as it sold 26,845, down from 39,826 cars in 2007.

South Korean Hyundai Motor Co (005380.SE) took the No 3. spot with 21,492 units at the wholesale level in 2008, down from 27,007 a year earlier.

Comite Automotor's statistics cover more than 90% of the vehicles sold in Colombia, including buses, private vehicles, taxis and trucks.

-By Inti Landauro and Diana Delgado, Dow Jones Newswires; 571-6107044 ext 1132; diana.delgado@dowjones.com

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