TRAVERSE CITY, MI – Despite Venezuela’s economic chaos, Toyota, the only automaker still remaining there, has no plans to exit the country.
That’s the word from Steve St. Angelo, Toyota senior managing officer and CEO of the Latin American and Caribbean Region, at a Center for Automotive Research Management Briefing Seminars session.
“We’re not writing off Venezuela,” he says. “It’s tough down there, but we’ll take care of our dealers and operations and everything (eventually) will be OK.”
Venezuela’s gross domestic product has dropped a precipitous 35% since 2013, deeper than the 28% plunge the U.S. experienced early in the 1930s Great Depression.
Toyota is building 100 cars there daily. Vehicles must be purchased in U.S. dollars, and the automaker buys parts with U.S. dollars, St. Angelo says. The reason: Venezuela’s inflation is hovering around 800%, and some forecast that rate to double by year’s end.
The official currency rate of $1:10 bolivars in reality has soared to $1:10,000 bolivars. One merchant reportedly now weighs bolivars rather than counting them because it takes much less time.
Toyota is building cars based only on incoming orders and not to accumulate inventory, says St. Angelo. “If you can reduce head count and costs, you can get by,” he says, adding that dealer parts and service operations continue to serve customers.
Violence has soared as Venezuela’s economic turmoil has intensified. A 30-year GM veteran, St. Angelo has a bodyguard during his visits and says he’s not worried. “I grew up in the Detroit area; I don’t do stupid stuff.”