Toyota's Venezuela unit has started exporting locally made car parts to generate hard currency income and help it withstand the OPEC country's economic crisis, a media report said.
What was once South America's third-largest automotive industry has taken a hit as stagnation in oil production and a complex currency control system stop private businesses' access to foreign currencies and ability to import supplies, Reuters reported.
Go deeper with GlobalData
Toyota's factory, and other automakers' assembly plants have had to reduce production due to a lack of components due to a shortage of dollars that has all but cut off imports.
"The key is to find solutions, find alternatives, don't depend on the government to take you out of these (problems)," Steve St. Angelo, Toyota CEO for Latin America and the Caribbean, told Reuters in an interview at the company's assembly plant in the east of the country.
"You have to help yourself, and that's what we're doing," he added while a truckload of Venezuelan parts was dispatched to Argentina under cheers and claps from workers in Cumana.
Toyota is exporting four types of parts, made from local and imported materials, to Argentina and hopes to gradually be able to export 26 Venezuelan-made parts to the rest of Latin America by the end of 2016.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData"(That's) almost US$2m of revenues per year and we can take these $2m, buy parts and manufacture vehicles, and then get more profit and keep the place running," added St. Angelo.
The company is also hoping to be the region's "first company to export to Cuba", the executive said.
However, under Venezuela's complex currency controls, 40%of hard income generated from exports has to be sold to the central bank, which converts them to bolivars using a fixed rate of around 50 bolivars.
The black market rate is now nearing 900 bolivars per dollar, the report noted.
Toyota is in talks with the leftist government of Nicolas Maduro to seek better business conditions, St. Angelo added.
Car companies have been forced to intermittently halt assembly plants or find creative solutions to access dollars, Reuters said. Ford's Venezuela unit began selling vehicles in dollars earlier this year, for example.
