CARACAS, May 19 (Reuters) - General Motors will suspend operations in Venezuela for at least three months from June as tumbling sales and government import restrictions add to the troubled U.S. carmaker's global woes.
The heavily indebted Detroit-based company represents about half of Venezuela's vehicle production but sales fell by 40 percent last year to 90,000 units on production difficulties, despite strong demand.
'Despite all our efforts, we will be forced to halt operations from next month,' General Motors' Venezuelan head, Ronaldo Znidarsis, told local newspaper El Mundo in an interview published on Tuesday.
The company said in a statement that even if it received the dollars it needed to pay suppliers immediately, production would not resume until September because of the lag in bringing parts from Asia.
Venezuela is an unusual car market in which new vehicles increase in value after hitting the road, since keen buyers will pay a premium to jump waiting lists that result from socialist President Hugo Chavez's strict foreign exchange policies.
Overall, Venezuelan car sales fell by 45 percent in the first four months of the year as the government further tightened exchange restrictions to protect currency reserves threatened by falling oil income in the OPEC nation.
General Motors may file for Chapter 11 protection in the United States if it fails to strike a deal with bondholders before a June 1 deadline.
The Venezuelan automobile industry has been plagued by sometimes-fatal labor disputes over the past year and has been warning for months about risks to operations because of delays in the state-run currency system that controls access to dollars to pay for imported goods.
Znidarsis said the local GM unit had debt of $1.2 billion with its overseas suppliers and said the state currency control board had not authorized the U.S. carmaker the dollars it needs to repatriate dividends since 2007.
General Motors, which has two plants in central Venezuela, aimed to produce 140,000 vehicles in the South American nation in 2009 but its output so far this year has been just 30 percent of that. The company employs 4,000 workers in Venezuela.
(Reporting by Fabian Cambero; Editing by Brian Moss and Matthew Lewis) Keywords: AUTO VENEZUELA/GM (pat.markey@thomsonreuters.com; + 57-1-634-4090; Reuters Messaging: pat.markey.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The heavily indebted Detroit-based company represents about half of Venezuela's vehicle production but sales fell by 40 percent last year to 90,000 units on production difficulties, despite strong demand.
'Despite all our efforts, we will be forced to halt operations from next month,' General Motors' Venezuelan head, Ronaldo Znidarsis, told local newspaper El Mundo in an interview published on Tuesday.
The company said in a statement that even if it received the dollars it needed to pay suppliers immediately, production would not resume until September because of the lag in bringing parts from Asia.
Venezuela is an unusual car market in which new vehicles increase in value after hitting the road, since keen buyers will pay a premium to jump waiting lists that result from socialist President Hugo Chavez's strict foreign exchange policies.
Overall, Venezuelan car sales fell by 45 percent in the first four months of the year as the government further tightened exchange restrictions to protect currency reserves threatened by falling oil income in the OPEC nation.
General Motors may file for Chapter 11 protection in the United States if it fails to strike a deal with bondholders before a June 1 deadline.
The Venezuelan automobile industry has been plagued by sometimes-fatal labor disputes over the past year and has been warning for months about risks to operations because of delays in the state-run currency system that controls access to dollars to pay for imported goods.
Znidarsis said the local GM unit had debt of $1.2 billion with its overseas suppliers and said the state currency control board had not authorized the U.S. carmaker the dollars it needs to repatriate dividends since 2007.
General Motors, which has two plants in central Venezuela, aimed to produce 140,000 vehicles in the South American nation in 2009 but its output so far this year has been just 30 percent of that. The company employs 4,000 workers in Venezuela.
(Reporting by Fabian Cambero; Editing by Brian Moss and Matthew Lewis) Keywords: AUTO VENEZUELA/GM (pat.markey@thomsonreuters.com; + 57-1-634-4090; Reuters Messaging: pat.markey.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.