Ford Motor Company announced last week that instead of making money in Latin America this year, it will likely lose $350 million in the region because the government of Venezuela devalued its currency, the bolivar, by 44%. Ford is currently holding more than $700 million in bolivars that it cannot exchange or repatriate. The Venezuelan government is trying to conserve its hard currency reserves and it will not give Ford dollars for bolivars. FoMoCo, which has built vehicles in Venezuela since 1962 and currently operates an assembly plant in Valencia, really doesn’t have any options other than to write down the loss. The car company can’t very well try to exchange currency on the black market. Other international companies, including Toyota, face similar situations with their operations in Venezuela. (Read More…)
As Venezuela faces an economic crisis that is depleting government coffers, President Nicolas Maduro is threatening to end something many citizens of that oil producing country consider to be their patrimony, incredibly cheap gasoline, the equivalent of 5 U.S. cents per gallon. That price hasn’t changed in almost two decades. In 1989 the price of gasoline was raised, prompting deadly rioting that went on for days and killed over 300 people. To keep the retail price that low, the government subsidizes gasoline to the tune of more than $12.5 billion a year. The result is that Venezuelans aren’t interested in small, clean, fuel efficient cars. Big old sedans, 1970s era trucks and newer SUVs dominate Venuzuelan roads, compounding both the amount of subsidies needed and the smog over Caracas. (Read More…)
If you cannot stand one more Hugo Chavez-related article, that’s ok I have prepared info about car sales in 155 other countries that you can explore in my blog, so click away!
Now the most paradoxical element of the car landscape in Venezuela is that by and large it is dominated by American brands…
But how is that possible I hear you ask with vigor?
When I graduated as an engineer, little did I know that I would be going to end up working inside a car (or truck) assembly site, even less so in one controlled by a rogue government that has a big bull’s-eye painted on it on a map in Langley, Virginia.
But life is what it is, and usually it tends to bring people to interesting situations and places. Still not convinced? Go and read one chapter of Niedermeyer Sr biography, Herr Schmitt’s autobiography, or any of Baruth’s racey adventures.
So in one of the hair needle turns of my life, I ended up spending some time around Iran’s national car. It wasn’t in Iran, but under Hugo Chavez. (Read More…)
The Christmas season would be a reason to be merry, would it not be for Hugo Chavez. More details about his expropriation threats emerge. Turns out, Chavez did not just threaten to kick out Toyota for being lackadaisical in the production of “rustic” vehicles.
“President Hugo Chavez told foreign automakers Wednesday to share their technology with local businesses or they will be told to leave the country,” writes the Boston Globe. Chavez gave the ultimatum in wholesale fashion to Ford, General Motors, Toyota and Fiat. Implied, the ultimatum is also meant for Fiat-controlled Chrysler, for Mitsubishi, Mack and Fiat-owned Iveco. All of the above have production facilities in Venezuela. All are at risk of instant deportation.
Venezuela’s, well, President Hugo Chavez took a page out of the U.S. government’s playbook, and ordered Toyota’s local assembly plant to make more cars, pronto. If the Japanese don’t produce an adequate number of vehicles designed for rural areas, Chavez will expropriate Toyota and kick them out of Venezuela.
According to this morning’s indignant Nikkei [sub,] Chavez said his socialist government is going to apply strict quotas on the number and types of vehicles firms can produce. He ordered an immediate inspection of Toyota’s facilities to see how many “rustic vehicles” they are currently producing. (“Rustic,” not “rusty.”)
“They’ll have to fulfill (the quotas), and if not, they can get out,” said Chavez during a televised address. “We’ll bring in another company.” And what company would that be?