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Venezuelan Auto Industry Sales Dipped Down
Oct 15, 2008

Automobile sales in Venezuela dropped drastically in H1 2008 due to high inflation, slow economic growth and rising sales of imported vehicles.

According to the Venezuelan Automotive Chamber (Cavenez), the volume of car sales in Venezuela from January to June 2008 plummeted 27.4% to 154,576 units from 213,056 vehicles sold during the same period a year ago, as reported by
eluniversal
.

The sales of locally-assembled cars dropped 1.2% in H1 2008 from the first half of 2007. The imported vehicles sold between January and June 2008 stood at only 82,000, while 72,000 Units were assembled domestically. In contrast, over 491,000 cars were sold in the entire year 2007, up 43% from 2006. The chamber expects a decline of 20% in sales of cars in 2008.

The fall in the automobile industry of Venezuela is primarily contributed to spiraling inflation that forced people to spend a big part of their income on daily necessities like food, fuel and energy. Consequently, people’s spending on automobiles suffered greatly and vehicle sales slipped down.

Also, the slow economic growth in the country is one of the main reasons for drop in vehicle sales. Imported vehicles are posing a tough challenge before domestically manufactured vehicles, leading to decline in sales. Moreover, people favor imported cars over cheap domestically-assembled cars, which contribute a major part in the overall sales of the Venezuelan automobile industry; as a result, the vehicle sales are falling in the country.

Furthermore, it is believed that the automobile industry will not see a reverse trend in sales in near future. The economic recession due to weak oil sector is likely to affect the car sales in the country. Manufacturers may also experience a decline due to taxes imposed on luxury goods. And country’s inflation may also limit the auto sales.

A Research Analyst at
RNCOS said, “The Venezuelan automobile industry is undergoing a cold phase due to antagonistic economic conditions. Under current circumstances, the auto manufacturers should launch low-priced models to encourage people for buying vehicles. Also, auto financiers and dealers should give auto buyers loans at low interest rates and the facility of easy installment to boost confidence among the buyers.”

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