The Venezuelan unit of Toyota Motor Company has begun selling locally-made car parts to generate hard currency income, according to media reports. All automakers in the region are struggling with production issues caused by a lack of components, in turn caused by a shortage of dollars. Toyota CEO for the Latin American region, Steve St. Angelo, is quoted as saying, "The key is to find solutions, find alternatives, don’t depend on the government to take you out of these [problems]. You have to help yourself, and that's what we're doing." The comments came as St. Angelo oversaw a truckload of parts being dispatched to Argentina. According to reports, Toyota is exporting four types of parts, which are made from local and imported materials, to Argentina, with plans to export 26 Venezuelan-made parts to the rest of Latin America by the end of 2016. However, the country has complex currency controls, which will require Toyota to sell 40% of hard income generated from exports to the central bank, which will convert it to bolivars using a fixed rate of 50 bolivars to the US dollar – while the black market rate has reportedly reached 900 bolivars to the US dollar.
Significance: The situation in Venezuela has continued to decline, with all automakers halting or slowing production at various points over the past year. According to Venezuelan automaker group Cavenez, production in October 2015 fell by 50% year on year, though it reports a 31% increase year to date, to a total of 15,707 units built in the country this year. The same group reports that Toyota's October production fell by 88%, to only 70 units in the month. Through October, however, Toyota's 2015 production is up 25%, to 3,200 units. The situation has affected financial results for Ford and General Motors, while Ford adopted a strategy of selling cars only in US dollars, looking to get access to the currency. Suppliers of parts and materials that need to be imported into Venezuela require payment in US dollars, as Venezuelan currency devalues.
