July 07, 2008
CARACAS, Venezuela -- Sales of new cars in Venezuela fell 27.4 percent in the first half of the year, reversing a recent upward trend as economic growth slowed and President Hugo Chavez capped foreign car imports in a bid to boost domestic production.
Total vehicle sales dropped to 154,576 in the first six months from 213,056 in the same period of 2007, the Venezuelan Automobile Chamber said Monday. Sales of domestically assembled cars fell by 1.2 percent in the same period over last year.
Venezuela's Trade Ministry has issued permits to import 219,000 vehicles this year, including motorcycles. Still, just 82,000 of the vehicles sold between January and June were imported, while 72,000 were assembled at local plants owned by Toyota, Ford, General Motors and others.
Car sales will likely fall by 20 percent this year, the automobile chamber said, cooling what has in recent years been a booming industry as oil income, government spending and available loans flooded Venezuela's economy with cash.
More than 491,000 cars were sold in the country last year, 43 percent more than in 2006. Demand has been so high that Venezuelans routinely queued on lists waiting up to eight months for a new car. They often preferred imports, which are generally cheaper than domestically assembled cars.
Government officials sought to reverse that preference, limiting imports for the first time this year to increase demand for locally produced cars and create jobs. Venezuelan assembly lines produced at just 50 percent of capacity last year, when sales of domestically assembled cars fell by 1.2 percent, according to government officials.
But the country's boom times are waning, with annual growth slowing to 4.8 percent in the first quarter of 2008, a four-year low, even as inflation neared 30 percent.
Toyota, Ford and General Motors could feel the effect: all have assembly plants in Venezuela, where the government in 2006 also formed a joint venture with Iran to start producing small sedans last year.
Since taking office in 1999, Chavez has launched a broad series of farm reforms and state-funded cooperatives aimed at boosting domestic production. But the oil-exporting country still imports most of the goods it consumes, particularly medicine and food.