Business & Economy

Lack of credit an obstacle to reactivating Venezuela’s automotive sector

By Carlos Seijas Meneses

Caracas, Nov 30 (EFE).- Venezuela is looking to reactivate its automotive sector by assembling models of Iranian vehicles, but auto industry representatives say the plan is only viable if the government takes steps to facilitate greater consumer access to car loans.

The president of the Chamber of Autoparts Manufacturers (Favenpa), Omar Bautista, told Efe that without adequate access to loans on favorable terms “it will be very difficult to reactivate vehicle sales on a mass scale.”

“70 percent of the vehicles sold in Venezuela (through 2015) were with loans. If there’s no credit, it’s very difficult,” he said.

According to the Office of the Superintendent of Banking Sector Institutions (Sudeban), Venezuela’s vehicle loan portfolio in September (the last month for which data is available) stood at $414,373, down 50 percent from the same month of 2021.

Iranian-made parts for a total of 3,000 vehicles are expected to arrive in Venezuela through year’s end, Transportation Minister Ramon Velasquez said recently, adding that those autos will cost between $12,000 and $16,000 in a country where the minimum monthly salary is equivalent to $12.

The representative of an international car brand who preferred not to be identified told Efe that Venezuelans, with the exception of a “small privileged class,” lack the purchasing power to buy new vehicles.

Venezuela once had a competitive auto industry that even exported 118,794 vehicles to Colombia and Ecuador under an Andean Community automotive agreement in the decade prior to 2002, four years before the Caribbean nation withdrew from that free-trade area.

Venezuela’s auto industry assembled 172,418 vehicles in 2007, but output has plunged since then amid a longstanding economic crisis; between January and October of this year, total production came in at just 62 units.

That compares to 2.78 million vehicles produced in Mexico and 1.96 million vehicles made in Brazil during that same 10-month period, according to official figures from those two countries.

The president and CEO of Iranian automaker Saipa, Mohammad Ali Teimouri, said recently that Venezuela will assemble vehicles from Iranian parts and that the production line of Venezuela-based auto manufacturer Venirauto – a Venezuelan-Iranian joint venture – is to be reactivated to manufacture 100,000 cars annually.

The president of Favenpa said, however, that the revival of Venirauto will do little to benefit Venezuela’s beleaguered auto parts companies, recalling that roughly 20,000 cars were produced at that plant between 2010 and 2017 without any parts purchased from local manufacturers.

Bautista also said the government has provided tax exemptions for auto parts imports, saying those inputs have flooded the market and constitute unfair competition for local industry. EFE


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