One bizarre aspect of Venezuela’s crisis has to do with automotive spare parts, and the near impossibility of replacing them. If your car battery dies, or even if you just get a flat tire, that’s it: you can kiss your car goodbye for God-only-knows how long. Why might that be?

This startling FT piece (registration required) offers some clues:

Goodyear Tire & Rubber became the latest big US company to detail damage from Venezuela’s financial crisis when the automotive tyre manufacturer reported a $646m charge against fourth-quarter earnings.

Laura Thompson, chief financial officer, said the company had been unable late last year to exchange Venezuela’s bolívar currency for dollars to purchase raw materials.

“These conditions, combined with Venezuelan regulations, have increasingly limited our ability to make and execute operational decisions at our Venezuelan subsidiary,” Ms Thompson said.

Goodyear concluded its Venezuelan operations no longer met the accounting criteria for operations under its control and had opted to deconsolidate it from its results, Ms Thompson said. The charge — $577m on a post-tax basis — pushed Goodyear into a $380m net loss for the quarter, against net income of $2.13bn for the fourth quarter of 2014. Net sales fell 6.7 per cent to $4.06bn.

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17 COMMENTS

      • The really shocking bit comes at the very end:

        “Goodyear’s shares were up 4.2 per cent in afternoon trade, at $27.45, as other aspects of the results exceeded expectations.”

        That’s how little Venezuela matters to big first world Multinationals: the very worst we can do with them doesn’t even hit their stock price for one day.

        • The investors are smarter than ever. They knew that there was a liability related to Venezuela, and the uncertainty was already priced in. After defining and writing off the loss, that uncertainty has been eliminated. Thus, the price went up. That is the value of transparency.

        • That’s an oxymoron. Venezuelans still tend to think that we are an important country in the world. No, we are not. We are a 30m people market with a income per capita of less than $6k (2013). Compare Canada with roughly the same population at $44k. Hence we do not make big dents in large corporations economic profiles even if they lost a lot of money like Goodyear, United, AA, Clorox ,etc…

          The only noise we make is an academic case of wholesale stupidity by being the country with the largest reserves of oil and the worst ever economic and (now) social performance. Lest not even talk of a gallon of gas for 2 cents.

          Perhaps the economic term “Dutch Disease” should be updated to “Chavez Disease” where a more or less functioning democracy morphed to a military narco-state dominated by pranes and a guy named lordgiven.

  1. “¿Pero por qué no usan sus propios dólares para comprar sus vainas? ¿Por qué tienen que usar los dólares del pueeeeebbbllloooooowwwaaaaaaaAAAAAAAA?”

    “¿Pa’ qué quieren dólares? Ah, claro, pa’ sacalos del país y seguir con la guerra económicaaaaAAAAAAWWWWWAAAAA.”

    “¿Es que en la cuarta cómo hacían entonces, puej? ¿Por qué no se traen los dólares de afuerrrraaaaaAAAAAAAWWWAAaaaaa?”

    Carajo, que alguien le llame la wwaaambulancia a los chaburros -_-

  2. Ah, I almost forgot, you know the hundreds of transport guilds that formed under the revolution’s wings? Full of those crappy fleets crammed with Ford Mavericks, Fairlanes, Malibus and whatever piece of garbage with wheels from before the 80s? They get these freebies from daddy government: One BRAND NEW BATTERY, and FOUR EFFIN’ NEW TIRES, and twelve liters of motor oil, PER CAR, once a year.

    • “Getting” freebies, and “promising” freebies, are two different things. I was recently offered one of these Chinese batteries at buhonero market price, but declined , due to dubious quality, such as for the Chinese tires, which last only a month or so. “Duncan” batteries, sold below cost after the Govt. took over the manufacture some years ago, and after one waits in line overnight for a total of almost 24 hours to get one of the 200 or so offered daily, often die after a month or so, and are probably re-conditioned old batteries in many cases. In Zulia, some are SEWING up ripped SIDEWALLS to try and make do. Venezuela is now so poor and ruined that even if featured in “Ripley’s Believe It Or Not”, would not be believable.

  3. It’s all part of a cunning plant to reduce traffic, pollution, road accidents and the amount of subsidised petrol sold internally (hence improving the budget)….doh, give Maduro some credit……(this was a joke)

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