Venezuela Car Sales Up 55%, Signaling Consumption Boom

Auto sales in Venezuela so far this year are the 55.4 percent higher than last year at this time, according to newly released numbers, the highest level in over a decade.

Caracas, Venezuela, April 9, 2006—First quarter auto sales are the highest in at least a decade, exceeding the 1998 previous high by over 10 percent, according to numbers from Cavenez, Venezuela’s auto industry group. This represents a 55.4 percent increase in sales over the same period last year.

Auto sales in Venezuela are extremely volatile, over the past decade it was not uncommon for sales to double or halve from year to year. Last year saw the highest auto sales in over a decade, almost 12,000 more than 2001, the decade’s previous peak.

Venezuelan car sales were 913 per 100,000 inhabitants in 2005, just under the rate of Argentina, which has over twice Venezuela’s per capita GDP.

Vehicles sales are encouraged in Venezuela through highly subsidized gasoline which is cheaper than bottled water. Also, the Family Vehicle program, begun in 2000, allows for the sale of some models of cars tax free.

Due to the number of cars on the road, frequent traffic jams and at times visible air pollution plague Caracas and other major Venezuelan cities.

The car sale numbers come out as general consumption spending in Venezuela is on the rise. Since the brief coup in 2002 and an oil industry shutdown in 2003, which stifled growth, the economy has expanded faster than any in the hemisphere, due, in part, to high gasoline prices and high levels of government spending. According to Reuters, shopping mall and whisky sales between 2004 and 2005 rose at almost 40 percent and 55 percent respectively.