Price controls, subsidies and the risk of good intentions: Economics Crash Course # 20
Price controls make Venezuela the only country in the world where used cars are more expensive than New.
The problem with price controls is that if you can control the price of a product when it is new, you can t control the supply of the commodity, resulting in shortages and secondary markets are forming in place.
Venezuela is determined to repeat all the mistakes of the USSR and in fact the only country where used cars are worth more than nine.
On a site of popular used cars, a Jeep Grand Cherokee 2012 is more than double the price of a new well, and explorers Ford Fiestas-five easily match price factory sticker.
But that's because you can buy a used car Good luck buying a new one.
Over the past nine months, Luis Medina, a building caretaker, has scoured the new car listings, looking for a light truck or SUV Despite the money in hand, it's regularly turned away because of concessions long years of waiting lists.
General Motors, Mitsubishi, Nissan, whatever the brand, vacant showrooms in the city and the country are the rule rather than the exception Everything's sold a year before they reach the ground, said Giovanni Rubino, the manager of a Ford dealership in Caracas is empty and our waiting list, M. Rubino laughs, is infinitely long.
Just because the government sets a price, didnt mean the car will be available at this price.
The principle can leave car lovers in other parts of the world scratching their heads, but the vehicles actually gain in value in Venezuela as soon as they're driven out many new or used shortages and currency control the mandate of the Government fired on preowned price, as many consumers are desperate to find a car.
National Assembly of Venezuela has sought to lay the breaks on soaring car costs Last month, a bill was passed that, if signed into law by President Nicolás Maduro attempt to regulate new and used car prices, the perception of heavy fines and even jail time venders who don t comply with government approved prices.
This law is facing speculation, hoarding and usury directed to the Venezuelan families, who, with their hard work want to buy vehicles that are virtually stolen from them, said National Assembly Vice President Dario Vivas, on the passage of the bill.
Once the bill becomes law, there will be a black market in used cars no more new cars will be available for the Venezuelan families will find it impossible to buy cars.
Especially that Venezuela did not want to import cars He wanted to do his own cars.
Authorities began curb imports from 2007 in order to stimulate domestic production.
As a product of economic agreements between Venezuela and Iran, the joint car Venirauto published his first 300 units at an event in Caracas yesterday The plant, located west of Caracas to Maracay, produce about 25,000 cars per year using Iranian technology.
Shockingly seems to want them, I suppose a car with a built in explosive device on the engine that gets 2 feet per gallon is not so attractive.
After more than a decade of exchange control, greenbacks have become increasingly hard to find for both automakers and consumers The dollar shortage is undercutting not only the production of motor vehicles, but also raise the preowned price consumers are scrambling to protect themselves against the loss of the value of the local currency and high inflation, says the analyst Barclay Alejandro Arreaza.
Facing 20 inflation and investment controls 1 percent introduced in 2003 that limit the amount of bolivars citizens can leave the country, Venezuelans invest in durable goods.
The cars are gaining in value rather than depreciate due to supply and demand crisis, said Henkel Garcia, Economic Consulting analyst based in Caracas Econometrica In Venezuela, we buy cars to protect our wealth.
The shortage of used cars comes from the steep drop in sales of new cars between 2008 and 2010, and the near disappearance of new car leases during the financial crisis a result, aged three cars are now difficult to find and even older models hold their value.
cash rebates to breakage also took a lot of old road vehicles The shortage has pushed up the prices of used cars, often to the point that consumers who finance a purchase with subsidized interest rates can get new vehicles for about the same as that of a required monthly payment for a late model used car.
Almost all the cars traded today over 100,000 miles on it, and find a decent used car means that cold calling owners even when they aren t thinking about selling.
Every day now, Obama will be nationalized toilet paper factories.
Price controls make Venezuela the only country in the world where used cars are more expensive than New, price controls do venezuela.
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