'Venezuela Móvil' shelved?
12.07.05 | The Family Vehicle Program ended on May 6 and the government made a great song and dance when it announced that it would be replaced with the “Venezuela Móvil” Program.
This new program was drawn up along the same lines as its predecessor, but with some differences, including more conditions and explicit restrictions, both for buyers and for concessionaires, assemblers, and parts manufacturers, which have delayed the implementation of the program. One of the conditions is the complex system of permits imposed on the eight assemblers, the 91 autoparts factories, and the concessionaires (almost 800 in number) for them to be able to apply to Seniat for authorization to manufacture and market vehicles under the plan. The other is the agreements that the assemblers have to sign with the Ministry of Light Industries and Commerce (MILCO).
No progress has been made on either of these two conditions in the two months since the Venezuela Móvil Program was decreed.
One of the reasons for the delay is that Article 4 of the decree creating the program establishes that, in order to sign up for the plan, assemblers must adapt to “co-management schemes, the forming of cooperatives, the creation of a fund for boosting the development of autoparts,” and “may” make donations to the Nation and other State entities “by way of consideration of gross income for purposes of the collective and social utility” (sic).
The vagueness of the definitions given by the authorities and the fact that it is difficult to know exactly what the requirements they are imposing entail have created such a degree of confusion and complicated complying with the formalities to such an extent that the signing of the agreements has been put off time and again.
Meanwhile, the upturn in the economy, thanks to the high oil prices, improved access to credit, and the growth in the demand for vehicles have allowed the industry to continue selling the family models, but at a price that includes VAT.
The Family Vehicle Program was thought up to help the industry to recover from the depression in which if found itself, and in this it was successful. At the moment, production is at full capacity, and it is expected that supply will meet demand in the medium term, which would result in healthy competition within the industry.
It looks very much as though the moment for a program such as “Venezuela Móvil” has passed, as there is no longer any need for it, and that another economic crisis will be needed if it is to be taken off the shelf.
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