CARACAS, VENEZUELA – In a country where gasoline costs just 18 cents per gallon, it’s no wonder Venezuelans love their cars. Even used cars are highly valued. In fact, used cars appreciate with age. Owners and dealers can make large profits on old cars.
Take the case of Juan Carlos Lagorio, an English teacher from a Caracas suburb. In 2002, he bought a Hyundai Sonata for $17,000. Last year he sold it for $30,000 and bought a Chevrolet Epica (a model not sold in the US).
“I think it’s crazy,” Mr. Lagorio says. “For me, it’s necessary to own a car. I live in the suburbs, so if I need to go into the city, I need a car.”
Much of the profit car owners make is wiped out by inflation: In 2008, the cost of living rose by just over 30 percent, and this helps explain the phenomenon. Venezuelans buy physical assets rather than see their money shrivel in bank accounts, says Robert Bottome, editor of Veneconomia, a leading business magazine.
The situation is exacerbated by a car industry that’s foundering. The government has imposed restrictions on new-car imports in a bid to stimulate the national car manufacturing industry. Venezuela has no car brands of its own, but is home to six assemblers of brands like Ford, GM, Toyota, and Hyundai.
Demand far outstrips supply. Last year just over 250,000 units were sold, despite a demand for 600,000, according to the Venezuelan Automotive Chamber. Car buyers must wait up to two years for a new car, and even then they may have no say on brand or color.