The economy of Venezuela is in a downward spiral, which has an a devasating impact on the local fleet market.
The economy of Venezuela is heavily dependent on its massive petroleum industry. It is the fifth largest member of OPEC by oil production.
Consequently, the steep decline in crude oil prices has had a severe impact on the Venezuelan economy. For instance, revenue from petroleum exports account for more than 50% of the country’s GDP. With a forecast that oil prices continuing to be depressed into calendar-year 2017, the short-term outlook for the Venezuelan economy is not positive.
The Fleet Market in Venezuela
The Venezuelan fleet market is comprised of local companies and multinational corporations, of which about 500 are U.S. companies with business operations in Venezuela. The strongest vocational segments for commercial fleet sales in Venezuela are oil companies, healthcare, and agriculture.
However, the fleet market for multinational companies is starting to contract as companies begin to exit the market.
In July 2016, Kimberly-Clark announced that it would close its Venezuela operations, because of the difficult business conditions and difficulty in getting paid for the products it sells. Also last July, Coca-Cola stopped soft drink production because there is no sugar. International airlines, such as Aeromexico, have halted flights to and from Caracas because currency controls make it nearly impossible to ship profits back home.
Because of the scarcity of product, no fleet or retail incentives are necessary to sell vehicles in the Venezuelan market. Instead there are waiting lists for those wanting to buy new vehicles.
Currently, there is an extreme shortage of new vehicles available for sale in Venezuela. When available, the types of vehicles acquired by companies are geared toward trucks and SUVs.
Fleet Maintenance Trends
The currency exchange policies have also made vehicle parts and components scarce and difficult to find in Venezuela. This scarcity of automotive replacement parts has increased market demand, which, in turn, has created a black market supplied by thieves who steal parts and batteries from parked cars.
Restrictions on new-vehicle imports, coupled with the fall in local vehicle production, have distorted the Venezuelan automotive market to where used-vehicle prices appreciate rather than depreciate in value.
The depreciation rate for vehicles in Venezuela is almost zero, unlike other markets in the world. Due to the low supply of vehicles in the country, resale is very high and, usually, a used vehicle is sold at a higher price than a new one.