Venezuelans enjoy free highways and dirt-cheap gas, but are struggling to buy cars as production falters thanks to a lack of foreign currency to pay for imported parts.
Car assembly plants are facing their worst year in the oil-rich nation, producing five times fewer units than last year due to the lack of imported supplies amid an economic crisis that began last year.
Most economic experts blame the South American country’s problems on a decade of rigid currency and price controls, as well rising debt, dependence on imports and stagnant economic growth.
Photo: AFP
Since February, four of the nation’s seven assembly plants — owned by Chrysler Group LLC, Ford Motor Co, Iveco SpA and Toyota Corp — have gradually stopped production.
Foreign carmakers in Venezuela must go through a complex bureaucratic process to obtain US dollars and the government only provides the currency at the official rate of 6.3 bolivars per greenback to importers of designated priority goods such as food and medical supplies. Others who need US dollars to pay overseas bills have to buy them at a higher rate at government-run auctions.
Many companies have complained that Caracas is not providing them with enough hard currency. The currency controls in place since 2003 have led to shortages of a wide range of basic goods and fueled an inflation rate hovering at just less than 60 percent.
So far this year, government data show that the auto sector has received less than 1 percent of foreign exchanges granted to importers. Consequently, auto production saw a sharp drop of 82.6 percent so far this year compared with last year, according to the Venezuelan Automotive Chamber.
A total of 104,000 units were produced in 2012; that number fell to 72,000 units last year and by the first quarter of this year, had fallen further to 3,990 — The industry has been halved in five years.
Faced with this crisis, Venezuelan President Nicolas Maduro’s government this week summoned local representatives of Chrysler, Ford, General Motors Co and Toyota to address their factories’ currency settlements, estimated at almost US$2.8 billion.
Although the government said General Motors would not close its plants this year, union leaders have said the company’s two factories would stop production this month because they had no input.
Dealerships across the board have almost no units to sell and many only keep their doors open to provide maintenance services. Customers often have to wait a year to get the car they ordered.
In recent years, the middle and upper classes have turned to buying cars as a way to hedge against inflation, which sits at four times the interest rate on bank deposits.
Yet as demand exceeds supply, many resort to the used car market, where vehicles are more expensive than new ones, whose prices are controlled by the government.
A new Mitsubishi Lancer from this year costs 458,000 bolivars (US$45,800 at the official rate or US$6,500 on the black market) while a used, 2012 version of the same model costs about 1.3 million bolivars. A middle-class family would need an average of four years of income to buy the second-hand Mitsubishi.
Workers are especially worried about the decline in production.
“We could lose our jobs. We are the ones who are suffering the most,” said Christian Pereira, the head of national auto workers’ union FUTAAC.
Venezuela’s vehicle assembly sector employs about 11,000 people directly and 100,000 indirectly, accounting for nearly 1 percent of private-sector jobs.
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
RSS