Hugo Chavez, Venezuela’s president-for-life, has pushed major oil companies that would not pay tariffs to his government and give up some of their assets out of the South American nation. He recently began to close banks that he believed did not favor government policies.
Chavez now wants foreign car companies to share their technology with local manufacturers or leave the country. According to the AP, “Chavez gave the ultimatum to Ford, General Motors, Toyota and Fiat during a public ceremony in the Venezuelan capital.”
South America has been one of the few bright spots for the sales of the multinational car companies. The region and China has helped offset rapidly falling revenue in the US, UK, EU, and Japan. Any action that would force major vehicles manufacturers out of Venezuela would hurt earnings at the firms.
It may be that the large car companies will stay. There is a precedent for using joint ventures to make and market cars in China. VW and GM, the two dominant brands in the world’s most populous nation, both do a great deal of their business in partnership with local car companies.
Multinational car manufacturers may not like it, but the only way that they may be allowed to stay in Venezuela is to adopt the same operating structures that they have in China.
Douglas A. McIntyre
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