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  • Ford Venezuela Operations to Price Trucks, SUVs in Dollars

Ford Venezuela Operations to Price Trucks, SUVs in Dollars

Restrictions on Local Currency Leave Local Assembly Without Components

May 14, 2015
The world’s economy has become increasingly global, with many companies relying on the relatively free flow of currency and goods across borders. However, the restrictive and protectionist policies of some countries have severely impacted the revenue from some manufacturers’ operations. One of the most dramatic examples of this is the restrictions placed on the Venezuelan Bolivar.
Venezuela has a complicated multi-tier exchange rate with the dollar, ranging from an official 6.3 bolivars to the U.S. dollar to an intermediate 12-to-1 ratio, with the black market exchange rate being as high as 190 bolivars to a U.S. dollar. This has made it nearly impossible for businesses operating within the country to purchase foreign goods. To mitigate some of the effects of this complex system, Ford of Venezuela will start to sell trucks and SUVs in U.S. dollars as a way to bolster its hard currency reserves and to buy parts from the U.S. the unit needs to assemble vehicles locally, Reuters reports. Ford sells the Explorer and EcoSport SUVs and the F-250 and F-350 Super Duty in Venezuela.
The situation has gotten so critical that dealers are using dollars from sales to clients to purchase components for the factory, as Ford corporate is no longer financially supporting local operations. For the time being, sales of Ford cars, such as the Fiesta, will continue to be conducted in the local currency. Ford Motor Company is reportedly owed as much as $400 million from the Venezuela operations.
Source: Reuters

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