General Motors will suspend operations in Venezuela for at least three months from June due to falling sales and government import and currency restrictions.
Go deeper with GlobalData
GM accounts for about half of Venezuela’s vehicle production but sales fell 40% last year to 90,000 units due to production difficulties, despite strong demand, Reuters reported.
“Despite all our efforts, we will be forced to halt operations from next month,” General Motors’ Venezuelan head, Ronaldo Znidarsis, told local newspaper El Mundo in an interview published on Tuesday.
The company said in a statement that even if it received the dollars it needed to pay suppliers immediately, production would not resume until September because of the lag in bringing parts from Asia.
Venezuela is an unusual car market in which new vehicles increase in value after hitting the road, since keen buyers will pay a premium to jump waiting lists that result from socialist president Hugo Chavez’s strict foreign exchange policies.
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 GlobalDataOverall, Venezuelan car sales fell 45% in the first four months of the year as the government further tightened exchange restrictions to protect currency reserves threatened by falling oil income in the OPEC nation, Reuters noted.
The Venezuelan auto industry has been plagued by sometimes-fatal labour disputes over the past year and has been warning for months about risks to operations because of delays in the state-run currency system that controls access to dollars to pay for imported goods.
Znidarsis said the local GM unit had debt of US$1.2bn with its overseas suppliers and said the state currency control board had not authorised the dollars needed to repatriate dividends since 2007.
General Motors, which has two plants in central Venezuela, aimed to produce 140,000 vehicles in 2009 but its output so far this year has been just 30% of that. The company employs 4,000 workers in the country, Reuters added.
