You may remember that late last year, the Venezuelan government decided to regulate prices of new and used cars in order to fight record inflation. Fast forward to July 2014, and one can see that the results of this policy are catastrophic for the country’s automotive industry.
What was once the third largest automobile producing country in South America is now struggling to roll out a few vehicles a day.
Venezuela’s assembly plants, run by global automakers like Ford, Fiat Chrysler Automobiles, GM and Toyota, have cut output by more than 80 percent in the first six months of this year compared with the same period last year because of a lack of dollars to pay suppliers. While carmakers built 36,919 vehicles through June of last year, they only made 6,161 vehicles during the same period this year.
Ford, which suspended production in May at its plant in Venezuea, due to lack of foreign currency, has since been in talks with the government to obtain more dollars to import needed parts. A Ford spokesman declined to provide details on the discussions but told the Wall Street Journal that the automaker is focused “on getting all operations in Latin America back to profitability.”
The auto industry’s decline in Venezuela is more than obvious, and many believe that president Nicolas Maduro’s policies are to blame. However, the president blames the car companies for being too greedy. The government fined GM last year after accusing it of selling overpriced car parts.
In February 2014, Mr. Maduro publicly criticized Toyota for its plans to cease production, suggesting the Japanese automaker was colluding with his political enemies to destabilize his government. In the meantime, Venezuela is one of the rare countries were used cars gain in value each month because of supply shortages.
By Dan Mihalascu
Note: The car in the photos is the Fiat Siena-derived Dodge Forza, assembled in Venezuela
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