Ford's Venezuela Money Problem

Ford's Venezuela Money Problem
Ford's Venezuela Money Problem

The Venezuela division of Ford will begin selling vehicles only in dollars in the coming months, two sources familiar with the situation told Reuters on Friday, as currency controls leave the automaker unable to recover revenue from local sales.

A lack of parts for assembly in April led Ford de Venezuela to halt operations as it was unable to obtain dollars for import through the exchange control system. The controls have also left Ford unable to turn the local bolivar currency into greenbacks.

"We will begin sales in hard currency toward the end of June; things are very advanced," said a source linked to the Venezuelan network of Ford retailers, who is unauthorized to speak publicly about the issue and requested anonymity.

"It has been very secretive. The government has asked that Ford be very discrete about this."

The source said retailers had put in their own dollars to import parts from Ford headquarters, which "deconsolidated" Venezuela operations because it could neither ensure supplies of parts nor repatriate dividends.

The agreement also requires that Ford be allowed to export part of its output to other Latin American countries to ensure further supplies of hard currency, the source added.

Ford de Venezuela did not immediately respond to a request for comment. The Communication Ministry did not answer an email seeking comment.

The measure is unlikely to be well-received by Venezuelan consumers, who have limited access to dollars. Cars are already difficult to obtain due to the production problems.

A second source in the auto retail business, who is also unauthorized to speak publicly about the issue, said the remaining assembly plants are evaluating similar actions, adding that cars are already being sold in dollars by some retailers through "under the table" transactions.

Selling goods and real estate in hard currency is not uncommon in Venezuela, but was outlawed for years and is seen as a legal gray area.

The 12-year-old currency control system created by late socialist leader Hugo Chavez has steadily reduced disbursement of dollars as last year's tumble in oil prices slashed the country's hard currency revenue from exports.