Venezuela Said to Weigh Dollarization to Save Auto Industry
Fabiola Zerpa Andrew Rosati
June 23, 2016 — 4:23 PM CEST Updated on June 23, 2016 — 9:35 PM CEST
Fiat Chrysler Automobiles NV, General Motors Co. and Toyota Motor Corp.
are close to resuming manufacturing in Venezuela after the government
allowed them to sell output in dollars.
Toyota plans to restart production lines in August, offering Corolla,
Hilux and Fortuner models, spokesman Luiz Carlos Andrade Jr. said via
e-mail. Fiat Chrysler reached an agreement with the government last
week, and GM is planning to begin assembling some models locally next
month, according to people with knowledge of the talks who weren't
authorized to speak about the companies' plans.
The arrangement is similar to one Ford Motor Co. reached last year in
which Venezuelans pay Ford dealers up front in a dual-currency plan:
dollars for production materials, which are imported from abroad, and
bolivares to cover the costs of assembling their vehicle locally.
Venezuela has been buffeted by the global collapse in commodity
prices. As petrodollars dried up, automakers were unable to import parts
for assembly in Venezuela or repatriate their earnings. Across the whole
economy, local production has been stymied and imports have been curbed,
causing chronic shortages of food and many basic staples.
General Motors and an official at Venezuela's Information Ministry
declined to comment on the prospective agreements, while local spokesmen
for Fiat weren't immediately available.
In March, President Nicolas Maduro announced an accord to "reactivate"
the country's auto sector. Multiple automakers -- including Chery
Automobile Co., GM, Fiat Chrysler, Ford, IVECO Ltd., Mack Trucks Inc.
and Mitsubishi Motors Corp. -- attended meetings, which Maduro called a
"win-win" to help generate revenues in the cash-strapped nation.
Despite the prospective deal, production levels have continued to slump
to all-time lows in the OPEC-member nation. According to Venezuela's
automobile chamber, Cavenez, 1,227 vehicles were produced in the country
through May this year, the majority by Ford.
Those involved in the recent negotiations say agreements were slow to
close as automakers sought to lift tight energy regulations implemented
under late President Hugo Chavez, and roll back taxes across the industry.
Source: Venezuela Said to Weigh Dollarization to Save Auto Industry -