By Mike Spector And Kejal Vyas
General Motors Co. is likely to halt vehicle production in
Venezuela this summer amid currency-exchange problems, the Detroit
auto maker said in a regulatory filing.
The largest U.S. auto maker cited Venezuelan foreign-exchange
regulations that make it difficult for its subsidiaries there to
obtain U.S. dollars. The upshot: GM could stop vehicle production
in July.
"Absent an ability to obtain U.S. dollars in the near term,
which we believe is unlikely, current vehicle production will
likely cease in July," GM said in a quarterly financial filing.
A GM spokesman said "production continues in Venezuela and no
decision has been made to cease operations. We continue to work
with the Venezuelan government to seek solutions to convert
currency."
GM makes the Chevrolet Aveo, Orlando and Cruze cars and
Chevrolet Silverado pickup truck at a factory in Valencia, the
spokesman said.
GM this week began laying off 446 workers at the plant, slashing
its workforce by 13%, said Christian Pereira, a spokesman for the
local auto manufacturers union. Mr. Pereira says he expects more
job cuts to follow. A GM spokesman declined to comment.
Chrysler, now called FCA U.S. LLC and part of Fiat Chrysler
Automobiles NV, in December let go of 76 workers. Ford Motor Co. is
seeking approval from Venezuelan authorities to reduce personnel by
267, Mr. Pereira said. "It's very difficult," he said. "It's we,
the workers, who have to pay for a crisis that we didn't even
cause."
The devaluation of currency in Venezuela has bedeviled U.S. auto
makers. Ford earlier this year revealed it was taking a big charge
for the last three months of 2014 to remove the country's
operations from its consolidated earnings.
Car production fell by 73% in 2014, according to the Automotive
Chamber of Venezuela, a trade group.
For more than a decade, Venezuela's government has maintained
rigid foreign-exchange controls that restrict access to hard
currency, making it difficult for multinationals to pay for imports
and repatriate dividends. Now, as the oil-rich country suffers from
an economic crisis and falling crude prices, it has made fewer
dollars available to the private sector, with the automotive
industry suffering one of the biggest hits.
The automotive sector suffered a 78% drop in dollar allocations
from the government to $264 million in 2014, compared with the
previous year, according to Caracas business consultancy
Ecoanalitica. This year, the sector is expected to see no more than
$130 million.
Write to Mike Spector at mike.spector@wsj.com and Kejal Vyas at
kejal.vyas@wsj.com
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