President Maduro announced today that his war on inflation, prices and commerce will move over today…to cars. Yeap! For those of you that have been looking for a car to buy (or used for that matter) for the last two years and have not found one, you can rejoice, as, as of tomorrow, that non-existing car will actually go down in price, in another milestone for the revolution.
Maybe he should lower the price of toilet paper, while he is at it.
The story of the automotive sector is the same as that of most sectors of the the Venezuelan economy. The Government begins to squeeze out the private sector, destroying manufacturing capacity for the sake of socialism , favoring imports, particularly Government imports. The private sector gets fewer and fewer dollars and the Government gives out favors, charges commissions and uses the cars for political purposes. Of course, it is all sold as a big favor to the middle class, who supposedly will benefit from it. Maybe , like in the picture above, it will be the military middle class that gets the cheaper cars.
Car sales in Venezuela are down sharply in 2013. Total sales the first nine months of the year, according to Veneconomy were down 17.5% at 81,950 cars, but more importantly, sales of cars made in Venezuela were down 31.1% at 57, 236 units in the first nine months. For comparison, in 2007, car sales were 491,000, of which close to 200,000 were locally made.
Car makers in Venezuela are owed US$ 1. 8 billion today and find the flow of foreign currency spotty. Last June they had a big burst of Cadivi payments, which by now have disappeared.
Meanwhile, cars imported by the Government are increasing. Veneconomy reports that while SEAT and Honda have not been given licenses to import cars for six years, independent importers related to the Government have been give licenses to import Chinese cars from distributors which are not even China based. They expect that 30,000 such cars will be imported this year. I wrote about some of these imports a couple of months ago.
Then there are the four car assembly projects which involve the Venezuelan Government, including the Chery project, which claims to be making 18,000 cars a year and will expand in the nationalized plant of another Chinese company called Great Wall. The other projects, including Venirauto, are seldom heard about. But are reportedly making some cars.
But the smoke and mirrors continue. The Government announced with great fanfare the Productive Venezuelan Automotive System, sort of like Gran Mision Vivienda for cars, and close to 400,000 people registered for it. About 3,800 people have so far received a car so far.
And today will be the crowning glory, as Maduro regulates car sales and sets car prices to go down. If you can ever find one.
Fortunately, as reported in Fausta’s blog, we have enough ambulances that they can be used for other purposes, such as electoral campaigns:
Maybe they should sell ambulances to the public.
You have to love socialism.