Share This Page

In Venezuela, driving a car off the lot increases its value

| Saturday, Feb. 16, 2013, 8:09 p.m.

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.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.