CUMANA, Venezuela (Reuters) - Toyota’s Venezuela unit has started exporting locally made car parts to generate hard currency income and help it withstand the OPEC country’s economic crisis.
What was once South America’s third-largest automotive industry has taken a hit as stagnation in oil production and a complex currency control system stymie private businesses’ access to foreign currencies and ability to import supplies.
Toyota and other fellow assembly plants have had to reduce production for lack of spare parts, due to a dearth of dollars that has slammed imports.
“The key is to find solutions, find alternatives, don’t depend on the government to take you out of these (problems),” Steve St. Angelo, Toyota CEO for Latin America and the Caribbean, said in an interview at the company’s assembly plant in the east of the country.
“You have to help yourself, and that’s what we’re doing,” he added, while a truck loaded with Venezuelan parts was dispatched to Argentina under cheers and claps from workers in Cumana.
Toyota is exporting four types of spare parts, made from local and imported materials, to Argentina and hopes to gradually be able to export 26 Venezuelan-made parts to the rest of Latin America by the end of 2016.
“(That’s) almost $2 million dollars of revenues per year and we can take these $2 million dollars, buy parts and manufacture vehicles, and then get more profit and keep the place running,” added St. Angelo.
The company is also hoping to be the region’s “first company to export to Cuba,” the executive said.
The catch, however, is that under Venezuela’s complex currency controls, 40 percent of hard income generated from exports has to be sold to the central bank, which converts them to bolivars using a fixed rate of around 50 bolivars.
The black market rate, according to anti-government web site DolarToday, is now nearing 900 bolivars per dollar.
Toyota is in talks with the leftist government of Nicolas Maduro to seek better business conditions, St. Angelo added.
Car companies have been forced to intermittently halt assembly plants or find creative solutions to access dollars.
The Venezuela division of Ford Motor Co, for instance, began selling vehicles in dollars earlier this year.
Writing by Alexandra Ulmer; Editing by Chizu Nomiyama