In Venezuela, driving a car off the lot increases its value
CARACAS— Venezuela may be the only country in the world where a new car becomes more expensive the instant it's driven off the dealership lot.
Buying a used 2012 Ford Explorer SUV means coughing up 1.2 million bolivars, the equivalent of about $60,000 at the street exchange rate and double the cost of a new car, according to the country's leading used car website. Late-model used Jeeps and Ford Fiestas also cost double the price of what a new model would cost. That runs counter to the trend elsewhere in the world where new cars lose value as soon as they're sold.
The price reversal, many economists say, is the result of President Hugo Chavez's socialist-oriented controls, which have turned this country's economy upside-down and already produced shortages of basic supplies such as sugar and cornmeal. In the auto market, those policies have dried up the inventory of new cars, and Venezuelans who manage to drive one away from a car lot often resell it quickly at a profit.
For people such as bank manager Luis Villamivar, that's transformed auto shopping into an odyssey.
“It's frustrating. I have the money I need to buy one, but there are no cars available,” said Villamivar, who has been hunting for a car for more than five months.
Even as the country sits on the biggest proven oil reserves in the world, its auto market has been rocked by a snowballing of government restrictions and their unintended consequences.
Trying to stem capital flight, Chavez's government has for the past decade maintained currency exchange controls, which have made buying dollars difficult for Venezuelans and produced a black market where much higher rates are paid for greenbacks. At the same time, the government has cut back on U.S. currency being sold through an official exchange agency to businesses, creating a shortage of dollars available for imports.
Fewer autos are rolling off ships at the country's ports. Production overall in Venezuela has dropped, worsening shortages and pushing prices even higher.
The currency shortages have also fueled inflation topping an annual rate of 20 percent, but dealers have been reluctant to raise their prices too much for fear of being accused by government officials of price speculation, which might jeopardize their access to cheap dollars through the official exchange. The inflation has further spiked demand, as many Venezuelans buy cars, as well as apartments and appliances, as an investment to prevent their savings from being eroded by inflation.