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Venezuela Autos Report Q1 2013
Business Monitor International, January 2013, Pages: 54
Vehicle sales in Venezuela increased 11.2% year-on-year (y-o-y) in the first nine months of 2012.
However, sales declined 12.7% y-o-y in September, a considerable slowdown from the 28.9% y-o-y rise in the first four months of 2012. BMI has long maintained sales would drop back in line with our 10.8
%growth forecast for 2012, and this view is continuing to play out. BMI believes the relatively buoyant vehicle sales in the first part of the year were down to the credit-fuelled consumption increase, combined with favourable low base effects. The unwinding of this, combined with the expected devaluation of the bolívar, will serve to bring vehicle sales down in line with our forecast this year.
Venezuelan vehicle production in the first nine months of 2012 registered a y-o-y increase of 5%, to 83,790 units. Despite strong growth in the beginning of the year, the sector has become more subdued in recent months. In September, vehicle production declined 21% y-o-y, to 8,038 units. In light of ongoing declines in production and the weak regulatory and industrial environment, we recently revised our forecast to a more bearish 3% increase over the year, from a 10.4% increase previously. Vehicle production in Venezuela was given a boost in 2012 due to close ties between the government and China.
In February, Chinese automaker Chery opened four dealerships in the country, and has revealed plans to open 14 more. BMI believes that, without the government-aided investment of Chinese manufacturers,
production figures would continue their historic decline due to the lack of changes in the regulatory environment.
Our core outlook for the segment currently forecasts vehicle production reaching 140,909 units by 2016,
still a far cry from over 172,000 units produced in 2007, prior to the imposition of import restrictions.
Given that growth in domestic sales in directly related with dynamics in the production segment, we forecast vehicle sales to reach 198,500 units by the end of 2016 forecast period. This is still far below the 492,000 units peak reached in 2007.
There is some cause for optimism on the back of ongoing investment from Chinese, Russian, and Iranian auto manufacturers, although exact sales and production figures are difficult to find and verify. Indeed,
BMI warns of being overly optimistic about these developments due to potential volatility in the balance.
In February 2012, for example, Venezuelan president Hugo Chavez revealed that international sanctions imposed on Iran are hurting Venirauto, of which 64% is owned by the Venezuelan government and 36
%by Iran's Aidco. Chavez's acknowledgement of Venirauto's difficulties undermines one of the potential boosters for the Venezuelan autos production segment. Venirauto was to be part of the government's drive to form a large state-run automotive corporation and was to be involved in the entire production chain by engaging in a range of activities from the handling of raw materials to the distribution of finished products.
Venezuela remains our least favourite market in the Latin America region. The government is doing little to improve the operating environment for carmakers and there could be more downside risks, given that there are discrepancies between government policy and the experiences of carmakers themselves. Much will depend on whether carmakers have been able to significantly improve their production levels in line with the increased demand. We expect Venezuela's regional underperformance to continue as long as the policy of import restrictions remains in place.
It should be noted that all Venezuelan vehicle sales and production data comes from Automobile Industry Chamber of Venezuela, Cavenez. This is the only source of vehicle sales and production data for the country. The sales figures reported by the organisation represent only the total car sales for dealers registered to it (Fiat, Mini, BMW, Honda Motor, Kia Motors, Nissan Motor, Mazda Motor, Renault,
Scania, SEAT, Volkswagen and minor imports of other brands). The production figures reported by the organisation represent only the total number of cars produced in Venezuela by factories of manufacturers associated to Cavenez (Daimler, Ford Motor, General Motors Company, Iveco, Mack, MMC Automotriz and Toyota Motor). Therefore, the sales and production figures appear to overlook the sales figures of a number of important companies operating in Venezuela, including Russian manufacturer AvtoVAZ, and China's Chery International, among others. All trends in historical data, and BMI's forecasts for future trends in vehicle sales and production, are based on this limited picture of the industry. Attempts to garnish a fuller picture of the Venezuelan automotives sector are ongoing.
Executive Summary 5
SWOT Analysis 7
Venezuela Autos Industry SWOT 7
Venezuela Political SWOT Analysis 8
Venezuela Economic SWOT Analysis 9
Venezuela Business Environment SWOT Analysis 9
Global Overview 10
UK Boosts Europe, But Favourites Still Outperform 10
Table: Passenger Car Sales 8M12 10
Incentive Boom For Japan, US Powers On 11
Regional Overview 15
Bullish On Mexico 15
Comparative Weakness In The Productive Capacity Of Mexico's Regional Competitors 15
The Continued Recovery Of The US Vehicle Market 17
Positive Developments In The Domestic Supply Chain 18
A Number Of Trade Agreements And Quotas Exist Amongst Mexico's Large Neighbours 18
The Strength Of The Peso May Dampen Export Growth 19
Industry Risk/Reward Ratings 21
Table: BMI Risk/Reward Ratings For Autos Industry In Americas 24
Macroeconomic Forecast 25
Table: Economic Activity, 2011-2016 27
Industry Forecast Scenario 28
Table: Autos Sales, 2010-2017 28
Table: Autos Production, 2010-2017 31
Table: Autos Trade, 2010-2017 33
Table: Car Ownership Rate, 2010-2016 34
Competitive Landscape 34
Table: Vehicle Sales By Brand 35
Table: Production By Brand, January-May 36
Table: Production By Brand, June-September 37
Industry News 38
Passenger Cars - Forecast & Analysis 39
Table: Passenger Car Segment, 2010-2017 39
Company News 39
Commercial Vehicles - Forecast & Analysis 41
Table: Commercial Vehicle Segment, 2010-2017 41
Company News 41
Company Monitor 44
Company Profiles 46
General Motors Company (GM) 46
Ford Motor 46
Toyota Motor 47
Country Snapshot 48
Table: Venezuela's Population By Age Group, 1990-2020 ('000) 49
Table: Venezuela's Population By Age Group, 1990-2020 (% of total) 50
Table: Venezuela's Key Population Ratios, 1990-2020 51
Table: Venezuela's Rural And Urban Population, 1990-2020 51
BMI Methodology 52
How We Generate Our Industry Forecasts 52
Automobile Industry 52