GM Venezuela to Halt Output in June on Dollar Delays (Update1)

By Daniel Cancel

May 18 (Bloomberg) -- General Motors Corp.’s Venezuelan unit expects to halt assembly operations in June because of delays of as much as 290 days in getting government approval to buy currency to pay for imported parts.

GM Venezuela owes foreign suppliers $1.2 billion, and hasn’t received any parts in four months, diminishing production “significantly,” according to an e-mailed statement.

The local unit, with two assembly plants that employ 4,000 workers directly, will reach 30 percent of the production target of 140,000 vehicles this year “in the best scenario” as debts with foreign providers increase and the company awaits a government response, the company said.

“Some of our national providers and dealerships are in precarious conditions and confront the possibility of closing definitively, causing greater unemployment as well as shortages of vehicles, parts and services,” the company said.

Venezuelans must seek approval to purchase U.S. dollars at the official exchange rate of 2.15 bolivars per dollar following currency controls implemented in 2003. Following a plunge in government revenue on lower oil prices, the government slashed imports by 35 percent in the first quarter to save cash.

Car sales fell 62 percent in April from a year earlier as companies struggle with currency delays, labor strikes and vehicle import restrictions.

GM has a market share of 45.8 percent in Venezuela and represents 60 percent of total national production, according to the Detroit-based company.

To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.