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Latino Daily News

Saturday July 12, 2014

Venezuela Auto Industry Faced With “Unprecedented Crisis”

Venezuela Auto Industry Faced With “Unprecedented Crisis”

Photo: Venezuela's auto industry

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Venezuela’s auto industry is facing an “unprecedented crisis” after vehicle sales plunged 83 percent due to manufacturers’ inability to access the dollars they need to purchase imported components, the National Chamber of Commerce for Auto Parts, or Canidra, said.

Assemblers sold just 6,200 vehicles in the first quarter of 2014, a steep drop of 83 percent compared to the same period last year, while auto-parts importers have reported a similar decline in sales, Canidra President Jose Cinirella said in an interview with private TV network Televen.

Cinirella said “it’s no longer just the auto-parts sector that’s in crisis, but the entire automotive sector,” a scenario “unheard of in the past 50 years.”

“The entire Venezuelan automotive industry is in crisis, an unprecedented crisis,” he added.

He said the situation stems from “problems acquiring foreign currency, paying off debt, and repatriating dividends and capital” due to strict currency controls.

In 2003 then-President Hugo Chavez, who died last year, instituted those controls to stem capital flight and they have continued under his successor, Nicolas Maduro, who introduced a three-tier exchange system.

In a June report, the Automobile Industry Chamber of Venezuela, or Cavenez, said auto production plunged 83.3 percent in the first half of 2014 compared to the same period of last year.

Three of the Venezuelan auto industry’s seven plants - facilities run by Chrysler, Iveco and Mack - have been shuttered entirely, while Toyota assembled just 100 vehicles in June following a three-month production halt.

In the first six months of 2014, MMC Automotriz - the Venezuelan assembler for Mitsubishi- and Hyundai-brand vehicles - was the production leader with 2,097 units, followed by General Motors, with 1,694 units.

The local unit of Turin, Italy-based industrial vehicle manufacturer Iveco was at the bottom of the list with just 39 vehicles assembled.

The auto industry had been “the pride of Venezuela because we were the fourth-biggest” in the Americas, Cinirella said.

Automakers with operations in Venezuela, whose government has a monopoly on access to dollars, have repeatedly complained about an inability to acquire foreign currency to import supplies.

Due to those restrictions, several automakers have reduced production levels to a minimum and even suspended assembly operations.

In response, the government has been holding meetings with companies such as Ford, Mitsubishi and General Motors in a bid to find a solution.

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