Venezuela/Auto Sales -3: Ford Ops Still Shut On Strike

sg.biz.yahoo.com Tuesday January 28, 10:06 PM

CARACAS (Dow Jones)--Venezuela's automobile industry expects vehicle sales to plunge about 61% to roughly 50,000 units in 2003, from 128,623 in 2002, Ricardo Tinoco, the spokesman for Ford Motor Co.'s (F) local unit said Tuesday.

"Sales in January are almost nonexistent. February probably won't be much better. In fact, the whole first quarter will be absolutely off," Tinoco said, referring to the effects of an ongoing 58-day-old general strike which has severely affected the economy.

"If anything starts to happen, it will be in the second or third quarter," he added.

Select from the most reliable agencies  The automobile industry blames the predicted drop in sales on Venezuela's severe economic crisis combined with anticipated foreign exchange controls.

Gross domestic product is estimated by analysts to have contracted more than 8% last year, when vehicle sales were down about 41% from 216,977 units in 2001. Auto industry officials had predicted about a 50% drop for last year.

Given the strike virtually shut Venezuela's vital oil industry for more than a month, along with many other sectors, GDP is seen shrinking as much as 40% this quarter and up to 25% for the year.

Tinoco added the bolivar's ($1=VEB1853) steep devaluation has already had an affect on sales and will likely continue because imported vehicles and some 70% of parts for those assembled here have become more expensive.

After devaluing 46% in 2002, the bolivar lost about 25% against the dollar this year before the government halted sales of foreign exchange last week. The halt is to continue until the government implements measures expected sometime next month that could include a fixed rate for the bolivar and other restrictions.

Venezuela/Auto Sales -3: Ford Ops Still Shut On Strike

Because several of its local parts manufacturers are still on strike, Ford's production is still shut down, Tinoco said.

"We don't have an exact idea of when" production will resume, he said.

Although many businesses have reopened recently, strike leaders have said they won't officially call off the action until President Hugo Chavez agrees to early elections.

Chavez has said his detractors must avail themselves of constitutionally approved measures, such as an amendment shortening his term or a possible recall referendum in August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for the country's deepening economic crisis, as the economy likely contracted about 8% last year amid unemployment of 17% and inflation of 31%.

Chavez, first elected in 1998 on promises to eradicate corruption and inequality, has blamed the recession on an "economic coup" by his opponents.

In 2002, General Motors Corp. (GM) led local vehicle sales with 38,044 units, followed by Toyota Motor Corp. (TM) and Ford with 20,934 and 17,971 vehicles, respectively.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com