CARCAS, Venezuela (AP) — Venezuela's government is setting limits on prices for cars as President Nicolas Maduro tries to close a popular loophole used by savers to guard against the fastest inflation in two decades.
Maduro said Monday that he would use new emergency decree powers granted by Congress to enable the government to set "fair" prices for all cars sold in Venezuela. At the same time, used vehicles won't be allowed to exceed the price of newer models, he said in televised remarks.
Automobiles purchased in Venezuela generally jump in value as soon as they leave the dealership's lot as decade-old currency controls reduce the availability of imported cars and parts, leading to months-long waiting lists. Carmakers including Ford and Toyota are on pace to churn out 70,000 vehicles this year in Venezuela, about a third of their capacity and less than the 104,000 they produced here in 2012.
Amid the shortage of new cars, demand for even decade-old clunkers has been soaring as Venezuelans buy durable goods as a store of value at a time their salaries and savings are being eroded by 54 percent inflation and a plunging currency.
Instead of reducing inflationary pressures, however, the price caps are likely to spawn a black market for the buying and selling of used cars much like the one that already exists for rental apartments, where regulations are also severe, said Asdrubal Oliveros, an economist at Caracas-based economic think tank Ecocanaltica.
"Cars are going to become even scarcer, and prices will rise further," Oliveros said.
The government-controlled congress first approved a bill setting car prices last January but the legislation languished during the rocky transition surrounding former President Hugo Chavez's death in March from cancer.
Maduro is taking up the legislation now as he seeks to prop up pro-government candidate running in Sunday's mayoral elections.
Last month, he launched a full-blown offensive against businesses he accuses of gouging consumers, driving down the value of the currency in the black market and trying to destabilize his socialist government.
Since seizing a number of retail chains and ordering them to slash prices on televisions and fridges, Maduro has turned his attention to other targets, including the automotive industry, where he says speculation is rife.
Last month, TuCarro.com, a popular website for selling used cars, was ordered to stop listing vehicles less than two years old and more recently it stopped publishing prices altogether at the request of the government.
The government is also getting in the car business itself. Earlier this year it set a goal of selling directly to consumers 7,000 vehicles made in partnership with automakers from China and Iran.