Auto Parts and Electrical Components in El Salvador

The sector in figures

Source: INVEST: auto parts sector; INVEST: electrical components sector; Diario El Mundo: the 10 products that make up 42% of El Salvador exports, 8 August 2026; El Diario de Hoy: Salvadoran exports grow 3.7% to September and pass USD 5,000 million, 26 October 2026; Diario El Mundo: El Salvador competes globally but needs more technology investment, says Fusades, 5 June 2026; U.S. Department of State: 2026 Investment Climate Statements, El Salvador^1,2,4,5,6,8

What is made here

Two product groups dominate. Ignition cable sets for spark plugs make up almost all auto parts exports, and capacitors, mainly tantalum and ceramic types, lead electronic components. INVEST, citing TradeMap data, ranks El Salvador as the sixth exporter of tantalum capacitors in the world and the first in Latin America. Other cable sets and semiconductor parts complete the top five electronic component exports of 2025.^1,2,3

Source: INVEST: Manufacturing Industry Guide 2026³

Growth has continued in 2026. In the first half, insulated wires and cables were the sixth export product of the country and fixed capacitors the seventh, with USD 113.44 million and growth of 39.4%. Capacitors helped offset a 14.2% fall in textile and apparel exports within the maquila regime, whose other products grew 39.5%.^4,7

The base is wider than these two groups. INVEST counts USD 955 million of metalworking exports and USD 549 million of plastics and rubber exports in 2025, out of USD 4,022 million of manufactures. Plastic packaging alone reached USD 315.3 million, and welded tubes and steel bars lead metalworking, which gives suppliers for moulded and stamped parts.³

Main plants

Source: INVEST: Manufacturing Industry Guide 2026; Kyocera AVX: ISO 9001 certificate, El Salvador site^3,9

Yazaki, a Japanese maker of automotive wiring systems, has built harnesses in El Salvador for Subaru, Jeep chassis and Chrysler doors, and made its first export to the United States nine months after construction began. Kyocera AVX moved production lines from Mexico, England and the Czech Republic and widened its work from assembly to chemical processes, moulding, testing and packaging, according to INVEST, which reports that new production lines took 10 months to set up and that production efficiency is over 97%. Its Ilopango plant holds ISO 9001 certification for the manufacture and assembly of tantalum, niobium and multilayer ceramic capacitors.^3,9

The think tank Fusades cites AVX as an example of how foreign investment in technology lifts exports. Salvadoran high-technology exports rose from USD 38 million in 1994 to USD 386 million in 2025, and electrical and electronic products within them grew about 14% a year to USD 209 million.⁶

What INVEST is promoting

Source: INVEST: auto parts sector; INVEST: electrical components sector^1,2

INVEST names the United States and Mexico as the target markets for metal parts, and sees moulded auto parts as the next step for the plastics industry and vehicle interiors as a route for the textile industry.¹

Workforce, markets and limits

INVEST describes a labour force of about 3 million people, 54% of them under 40, and staff turnover below 10% in manufacturing. Yazaki reports an annual turnover of 0.48% at its Santa Ana plant. By law, 90% of plant and clerical staff must be Salvadoran, and the U.S. State Department notes that some employers bring in managers from abroad because of local skills gaps.^3,8

The United States is the main market for Salvadoran goods, with USD 1,662.3 million of purchases from January to September 2026, up 3.1%. Sales to Mexico, a large car-making country, rose 14.9%. Countries with trade agreements took 94% of exports, which matters for rules of origin on harnesses and electronic parts. An Agreement on Reciprocal Trade between the United States and El Salvador, signed in January 2026, is meant to lower trade barriers further, according to the State Department.^5,8

Fusades says that attracting more technology firms will require stronger technical and university education linked to industry needs, better energy and digital infrastructure, wider connectivity and a stable, predictable business climate.⁶

Incentives

Most exporters in the sector operate under the Free Zones Law, which exempts imports of machinery, raw materials and fuels used in production and grants income tax and municipal tax exemptions that depend on location. A free zone user needs at least USD 500,000 of fixed assets within two years or 50 permanent jobs from the first year. An inward processing warehouse (DPA) needs USD 800,000 or 75 jobs.³

Source: INVEST: Manufacturing Industry Guide 2026³

The Law for the Promotion of Innovation and the Manufacture of Technologies of 2023 grants 15-year exemptions to new plants for technology hardware and semiconductors, but cannot be combined with the free zone regime. Firms with at least 10 years in the country that expand in auto parts, electronics or plastics can use the Law for the Promotion of Investment Expansion, which gives an income tax credit of 10% for USD 1 to 10 million, 20% for USD 10 to 20 million and 30% above USD 20 million.^8,10,3

Check which regime fits before setting up: a free zone, a DPA and the technology law have different investment thresholds and cannot always be combined.