Toyota Motor Corp. (7203), the world’s largest automaker, is halting production in Venezuela as the South American country faces a shortage of hard currency.
The company is suspending production in Venezuela from Feb. 13 due to a delay in receiving customs clearance for parts, Shino Yamada, a Toyota spokeswoman, said today in an e-mailed response to questions, adding that there was no timeframe for the resumption of output.
Car sales in Venezuela fell 87 percent in January from a year ago to 722 units, the Caracas-based automotive chamber of commerce Cavenez said yesterday in a report posted on its website. Ford Motor Co. (F), the second-largest U.S. automaker, said last month that it was reducing production in the country as the availability of U.S. dollars crimps its ability to pay suppliers.
“The foreign exchange system is totally paralyzed, and if they’re not going to give dollars to import food and medicine, they’re obviously not going to assign dollars to car part importers,” Henkel Garcia, director of Caracas-based consulting firm Econometrica, said in a telephone interview today.
Ford sold two cars in Venezuela last month, while Toyota sold 225, or about a third of the country’s total, according to Cavenez.
Shortages of foreign currency have emptied Venezuelan shops of everything from shaving blades to milk as importers struggle to get dollars and prices rise at the fastest pace in the world with annual inflation of 56 percent.
Ford’s output in Venezuela fell about 75 percent in the fourth quarter from the first three months of the year, and the company’s assumption for this year is that output will remain near the fourth-quarter level, Chief Operating Officer Mark Fields said on Jan. 14.
Venezuela President Nicolas Maduro said Dec. 2 that he would sign legislation to regulate the price of new and used cars in the government’s latest measure to combat inflation.
The legislation, which has yet to come into effect, would allow the government to set car prices, ensure that used car prices don’t exceed new car costs and provide licenses to individuals to import a vehicle using an account in euros or dollars with a state bank, Maduro said in a national address.
“There are no incentives to produce and sell new cars in Venezuela, because the government has maintained uncertainty about the price regulations,” Garcia said. “The fact that only 700 cars were sold in the country last month is a clear sign of how paralyzed the sector has become.”
The government will resume weekly dollar auctions to companies on Feb. 10 after scrapping this week’s installment because it said there were fraudulent bids. The central bank will auction $440 million on that date and $220 million a week thereafter, Maduro said on state television yesterday.
The government will release $42.5 billion of foreign currency to the economy this year, including $11.4 billion through auctions which last sold a dollar for 11.36 bolivars compared with the primary rate of 6.3. On the black market, one dollar currently sells for about 81 bolivars, according to dolartoday.com, a website that tracks the rate on the Colombian border.
“Recent government actions in Venezuela, including price controls and a very limited and uneven supply of foreign currency to support production, have affected production adversely,” Bob Shanks, Ford’s chief executive officer, said in December. “Foreign currency access is controlled by the government and supply has been uneven and unpredictable for some time, and recently availability has been very limited.”
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