Venezuelan economic crisis hits hard on local auto industry

Article by Christian A., on August 13, 2014

The current economic crisis in Venezuela already has its fatalities, and the auto industry is one of them. Prior to the crisis, assembly lines in the country had been bustling. But now, the story is different. Carmakers are hurt by an economy characterized by a stagnation in oil production and a badly managed currency control system that makes it harder for private companies to access foreign currencies as well as import supplies.

Consider Jeep’s Valencia assembly plant. The site – once home to over 1,000 workers – built its last car five months ago and employees were sent home after raw materials ran out. Union leader Henry Ospina told Reuters that Chrysler is asking for the layoff of 119 workers.

He said that Chrysler told that it has become harder to maintain staff costs. Chrysler is not the only one feeling the heat in Venezuela. Sites operated by Ford Motor Co., General Motors, Toyota Motor Corp., Iveco, Mack, and Mitsubishi Motors Corp. are all working at minimum capacity.

In fact, vehicle output so far this year has dropped 83 percent year-on-year, with just 7,000 cars built, compared with around 43,000 in the same period in 2013. In July alone, carmakers just built 876 vehicles, representing 87-percent fall from the same month in 2013, according to the Venezuelan Automotive Chamber.

According to the auto industry, the national government currently owes it around $1.9 billion in dollar liquidations. Although officials denied currency problems, dollars do sell for VEF70 – over 10 times the lowest government exchange rate of $1:VEF6.3. Francisco Ameliach, governor of Carabobo state where Valencia is located, vowed to protect workers while speed up access to dollars for carmakers. [source: Reuters]

If you liked the article, share on:

Comments

Recommended

Hyundai is introducing a new 2018 Accent that is not only wider and longer, but is now also sporting a new look that is more serious than the previous model....
by - February 20, 2017
Fans and enthusiasts of the BMW M2 in the United States could now rejoice. This comes as their favorite BMW M2 is getting a limited edition version as prepped by...
by - February 20, 2017
Carmakers usually leave us thirsty for information on whether they would introduce a new, refreshed or face-lifted vehicle and on when they intend to launch it. There are reasons for...
by - February 20, 2017
Cadillac’s CT6 full-size prestige-luxury sedan is still somewhat new. It has been offered to the global auto market for two model years – 2016 and 2017. But for those who...
by - February 19, 2017
In many industries, it is the rivalries that make things exciting. In basketball for example, there is the well-known rivalry between the Los Angeles Lakers against the Boston Celtics. For...
by - February 19, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries