Venezuela Autos Report Q1 2012
Includes 3 FREE quarterly updates
A 3% year-on-year (y-o-y) fall in Venezuelan vehicle production during the first nine months of 2011 comes on the back of four consecutive years of declines in domestic production and have dashed BMI’s expectations of a return to positive growth in 2011. In view of the fact that the government is doing little to improve the operating environment for carmakers, we have downgraded our 2011 production forecast to a more than 2% contraction in 2011 while keeping our 2012 growth forecast of 8.5% intact.
In line with our long-held view that a lack of vehicles, and not a lack of demand, will be the key factor responsible for poor vehicle sales in Venezuela, we have also downgraded our sales forecast to a 4% y-oy decline in 2011. Estimates from the Venezuela Automobile Chamber of Commerce (Cavenez) show that although vehicle imports grew 22% during the nine-month period, demand for domestically produced vehicles fell 7.4% y-o-y during the period.
The magnitude of problems facing locally based carmakers can be gauged from the fact that, with the exception of MMC Automotoriz, all of them suffered declines in their domestic production. Toyota Motor was the worst hit, with its 9M11 production down almost 40% at 7,456 units, as labour disputes crippled its operations during July and August. This is in addition to the usual operational problems such as delays in issuing import permits and the scarce allocation of foreign exchange, which significantly limit parts purchases by carmakers.
Such is the pressure on vehicle supply that there has been the creation of a ‘parallel market’ with exorbitant vehicle prices and malpractices on the part of assemblers and dealers. In September 2011, the Venezuelan Ministry of Science, Technology and Intermediate Industries accordingly decided to regulate the prices of new cars at local dealerships in a bid to curb vehicle price speculation. BMI believes that the policy will do little to improve domestic vehicle sales as long as the import restrictions remain in place and production continues to suffer from a poor operating environment. We see little hope for a recovery in the Venezuelan autos market.
Given that the government is maintaining its policy of restricting imports and as production shows no sign of picking up, we are limiting our 2012 vehicle sales forecast to a modest 6.0% y-o-y. On a brighter note, India's Tata Motors in August 2011 revealed it is in talks with Venezuela-based MMC Automotriz to potentially begin assembly of its vehicles in the country, the Venezuelan Chamber of Commerce for Auto Parts (CANIDRA) has revealed.
While we see the announcement as a highly positive development for the Venezuelan autos industry, it does little to bolster our confidence in the industry. Labour disputes at Toyota Motor's operations, starting on July 28, have renewed our fears about the difficult operating environment for businesses in the country.
A 3% year-on-year (y-o-y) fall in Venezuelan vehicle production during the first nine months of 2011 comes on the back of four consecutive years of declines in domestic production and have dashed BMI’s expectations of a return to positive growth in 2011. In view of the fact that the government is doing little to improve the operating environment for carmakers, we have downgraded our 2011 production forecast to a more than 2% contraction in 2011 while keeping our 2012 growth forecast of 8.5% intact.
In line with our long-held view that a lack of vehicles, and not a lack of demand, will be the key factor responsible for poor vehicle sales in Venezuela, we have also downgraded our sales forecast to a 4% y-oy decline in 2011. Estimates from the Venezuela Automobile Chamber of Commerce (Cavenez) show that although vehicle imports grew 22% during the nine-month period, demand for domestically produced vehicles fell 7.4% y-o-y during the period.
The magnitude of problems facing locally based carmakers can be gauged from the fact that, with the exception of MMC Automotoriz, all of them suffered declines in their domestic production. Toyota Motor was the worst hit, with its 9M11 production down almost 40% at 7,456 units, as labour disputes crippled its operations during July and August. This is in addition to the usual operational problems such as delays in issuing import permits and the scarce allocation of foreign exchange, which significantly limit parts purchases by carmakers.
Such is the pressure on vehicle supply that there has been the creation of a ‘parallel market’ with exorbitant vehicle prices and malpractices on the part of assemblers and dealers. In September 2011, the Venezuelan Ministry of Science, Technology and Intermediate Industries accordingly decided to regulate the prices of new cars at local dealerships in a bid to curb vehicle price speculation. BMI believes that the policy will do little to improve domestic vehicle sales as long as the import restrictions remain in place and production continues to suffer from a poor operating environment. We see little hope for a recovery in the Venezuelan autos market.
Given that the government is maintaining its policy of restricting imports and as production shows no sign of picking up, we are limiting our 2012 vehicle sales forecast to a modest 6.0% y-o-y. On a brighter note, India's Tata Motors in August 2011 revealed it is in talks with Venezuela-based MMC Automotriz to potentially begin assembly of its vehicles in the country, the Venezuelan Chamber of Commerce for Auto Parts (CANIDRA) has revealed.
While we see the announcement as a highly positive development for the Venezuelan autos industry, it does little to bolster our confidence in the industry. Labour disputes at Toyota Motor's operations, starting on July 28, have renewed our fears about the difficult operating environment for businesses in the country.
Contents
Executive SummarySWOT Analysis
Venezuela Autos Industry SWOT
Venezuela Political SWOT Analysis
Venezuela Economic SWOT Analysis
Venezuela Business Environment SWOT Analysis
Global Overview
Industry Trend Analysis – Economic Woes Weigh On Car Demand
Developed Slowdown
Domestic Troubles
Slowdown: Blame It On Outsiders
Regional Overview
Industry News – Mexico-Mercosur Agreement Will Improve Region's Standing
Business Environment Ratings
BMI Ratings Update: Slowdown Fears Hurt Regional Scores
Can Brazil Catch Up?
Argentine-Mexican Rivalry
A Lonely Rising Star
Macroeconomic Forecast
Table: Venezuela - Economic Activity
Industry Forecast Scenario
Sales
Table: Venezuela Autos Sales By Segment – Historical Data And Forecasts
Production
Table: Venezuela Autos Production By Segment – Historical Data And Forecasts
Trade
Table: Venezuela Autos Trade – Historical Data And Forecasts
Economic Contribution
Table: Venezuela’s Autos Sector – Contribution To GDP, Car Ownership
Table: Venezuela Vehicle Production By Company, 2009-2010
Table: Venezuela Vehicle Sales By Company, 2010
Industry News
Pricing Regulations
Passenger Cars
Table: Venezuela Passenger Car Segment – Historical Data And Forecasts
Company News
Commercial Vehicles
Table: Venezuela Commercial Vehicle Segment – Historical Data And Forecasts
Light Commercial Vehicles
Table: Venezuela Light Commercial Vehicle Registrations By Manufacturer, 2003-2008 (CBUs)
Heavy Commercial Vehicles
Table: Venezuela – Heavy Commercial Vehicle Registrations By Manufacturer, 2007-2008 (CBUs)
Suppliers
Company Profiles
General Motors Company (GM)
Ford Motor
Toyota Motor
BMI Methodology
How We Generate Our Industry Forecasts
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