New Market Report: Venezuela Autos Report Q1 2014

From: Fast Market Research, Inc.
Published: Thu Dec 12 2013

Vehicle sales declined 17.5% year-on-year in the first nine months of the year, to 81,950 units. We hold a bearish outlook for consumer sentiment, and maintain our forecast for a 19% decline in the market in 2013. We believe that the poor macro picture in Venezuela will continue to impact vehicle sales over the year. The government's currency devaluation in February will pose a considerable upside risk to inflation, hike interest rates for vehicle loans, and make vehicle imports more expensive, thus eroding consumers' purchasing power and affecting sales volumes. We expect this to continue to filter through to consumer sentiment over the course of the year.

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BMI remains bearish on vehicle production in Venezuela, as the government continues to intervene in the economy, further restricting access to foreign currency and implementing import restrictions on vehicle components. Further, the recent currency devaluation will serve to make supplier imports more expensive, exacerbating shortages of components. Accordingly, we forecast a 25% decline.

BMI has long maintained that in order to see sustained growth in vehicle production, the regulatory environment needs a complete overhaul, particularly in the issuance of assembly permits and access to foreign currency. This does not look likely, however, and Venezuela continues to rank below the regional average on BMI's Risk/Reward Ratings.

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