5th UPDATE: Venezuela's Chavez May Expropriate Toyota Unit
December 25, 2009: 03:50 AM ET
(Adds comments by Mitsubishi Motors and Daihatsu Motor)
By Dan Molinski
Of DOW JONES NEWSWIRES
CARACAS -(Dow Jones)- Venezuelan President Hugo Chavez has threatened to expropriate Toyota Motor Corp.'s (7203.TO) local assembly plant if it doesn't produce more vehicles designed for rural areas and increase technology transfer.
Chavez said late Wednesday the Japanese auto maker needs to transfer more new technologies and manufacturing methods from headquarters to its local unit in Venezuela.
While Chavez directed most of his criticism at Toyota, he said other auto assemblers, including Fiat SpA (F.MI) of Italy and General Motors Co. (GM.XX)of the U.S., are also guilty of not sharing technology with their Venezuelan units.
Chavez said his government is going to apply strict quotas regarding the number and types of vehicles auto makers can produce. The president also ordered his trade minister, Eduardo Saman, to inspect the Toyota plant, saying it may not be making enough "rustic vehicles," a class of all-terrain vehicles that are much needed in Venezuela's countryside, where they are often converted into minibuses.
"They'll have to fulfill (the quotas), and if not, they can get out," Chavez said during a televised address. "We'll bring in another company."
He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it. "We'll take it, we'll expropriate it, we'll pay them what it's worth and immediately call on the Chinese," Chavez said. Chinese companies, he said, are willing to make vehicles for the countryside.
A Toyota spokesman said the company is checking with the Japanese embassy in Venezuela, the Venezuelan embassy in Japan and Japan's foreign ministry to determine the president's intentions. The company hasn't decided yet how or whether it will take any step, the spokesman said.
GM and Fiat officials in Venezuela were unavailable for comment.
Among other Japanese auto makers, Mitsubishi Motor Corp. (8058.TO) said a local company called MMC Automotoriz, S.A. produces the Lancer sedan and the Delica minivan for the Japanese car maker by using production technologies transferred from the Japanese partner.
A Mitsubishi Motors spokesman said his company hasn't heard from the local partner about whether it was asked anything by the president on the partner's production operations. He said the production volume in Venezuela is minimal compared with its global output volume.
Daihatsu Motor Co., (7262.TO) Toyota's small car-making subsidiary, said the parent company builds the Terios small sport-utility vehicle for the subsidiary at Toyota's local factory. The output volume totaled 2,564 vehicles in the first 11 months of this year while the company estimates its global output to reach 921,000 vehicles in 2009. A Daihatsu spokeswoman said her company has no comments on the remarks by the president as the plant is run by Toyota.
Toyota said Venezuela's overall auto sales--from all manufacturers--totaled 272,000 vehicles last year. Toyota sold a total of about 30,000 cars in that year, with about 13,000 of those produced locally. In 2008, the company sold nearly 9 million vehicles globally.
The Venezuelan market is too small to justify fully localizing production, said one senior Toyota executive familiar with the market. Because of the limited sales volume and the country's high duties on imported cars, the executive said, most global auto makers bring partially assembled cars into Venezuela and put them together in a process known as knock-down assembly.
The executive said Toyota doesn't yet have an affordable vehicle aimed at consumers in the developing world, but it does have plans for a no-frills car aimed at emerging markets that it refers to internally as the New Compact Car.
The car is due for launch in India late next year, and in Brazil the year after, though it doesn't currently have plans to launch it in Venezuela. It isn't not clear how much the car would cost.
Toyota's annual report says it has 90% of voting rights in its Venezuelan business. It isn't clear who controls the remaining 10%. Toyota's assembly plant in Venezuela has more than 2,000 workers, and has been in the country for more than 50 years.
In recent years, Chavez has nationalized dozens of foreign-owned companies and sometimes entire sectors of the economy, including cement companies, coffee companies and oil-services firms. The moves were part of his effort to move Venezuela toward "21st century socialism."
Venezuela's auto sector is in tatters amid recurring labor problems that have led to a lack of productivity. Analysts say many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with that status.
Toyota ran into labor problems earlier this year that led the company in March to take out an advertisement in a local newspaper warning that it may not remain here much longer. "For the first time in 51 years of uninterrupted work in Venezuela, the presence of Toyota de Venezuela C.A. in the country is seriously threatened," the company said in an ad in the EL Nacional daily.
In May, a Toyota union leader was shot dead. He had led a month-long strike last year that paralyzed the Toyota plant in the eastern city of Cumana. In September, prosecutors brought a murder charge against a man accused of killing the union leader, but gave no indication of a motive.
As a result of low productivity, demand for automobiles far outstrips supply in Venezuela. Demand is also enhanced by subsidized gasoline in this oil-rich nation where a gallon of gasoline cost about seven cents.
Eduardo Blanco, who manages a Toyota dealership in the Los Palos Grandes neighborhood of Caracas, said last week he has 600 people on a waiting list for vehicles, and that only a half a dozen cars arrive at his lot each month.
se Chavez vuole più macchine per le zone rurali e minibus con iveco possiamo accontentarlo, basta che il prezzo non lo decida lui
