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Venezuela Autos Report Q3 2011
Business Monitor International, May 2011, Pages: 49
The Venezuela Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Venezuela's automotive industry.
Vehicle sales and production in Venezuela continued a downward trend in Q111, falling 7.2% year-onyear (y-o-y), to 25,790 units, and 1.8% y-o-y, to 24,223 units respectively, according to estimates from the country's auto association Cavenez. BMI, however, stands by its forecast of a positive year for both sales and production in 2011, mostly on the back of the low base effects from the last three consecutive years of contraction.
Our optimism has been strengthened by improving trade relation between Venezuela and some of its neighbours. In March, the governments of Venezuela and Ecuador signed an agreement calling for the latter to supply 2,500 buses and taxis to the former for about US$150mn. In the same month, Venezuela entered into a trade agreement with Argentina allowing Argentine carmakers to export cars worth another US$200mn to Venezuela.
Meanwhile, vehicle imports also grew an impressive 78% y-o-y, to 4,015 units, during Q111, which BMI sees as a slight moderation in Venezuela's attitude towards vehicle imports and a sign that the government may slightly relax its import restrictions towards the end of 2011.
Apart from these, the country shows little signs of improvement in its business environment. In February 2011, the Venezuelan unit of Toyota Motor, the third largest car producer in the country, listed its bonds on Venezuela's newly launched Bicentennial Public Securities Exchange (BPSE). The government says it hopes the launch of the exchange will 'democratize' access to investments through the exchange and boost the economy. However, BMI believes that the move will bring short-term liquidity to the company, but will not be a long-term solution to the limited access of foreign currency for firms operating in Venezuela.
At this point, we are also sceptical about any significant improvement the development could bring to the country's auto production. Estimates from Cavenez show that Toyota's auto production accounted for less than 15% of the country's total auto production in 2010. Demand for Toyota's vehicles in the country, on the other hand, is also not very significant, accounting for just over 12% of the total market. On the back of these concerns, BMI continues to rank Venezuela at the bottom of its Risk-Reward Ratings for the autos industry in the Americas.
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