CARACAS (Reuters) - President Nicolas Maduro’s socialist government issued a decree on Thursday regulating the prices of used and new cars in the latest move to control the highest inflation rate in the Americas.
Maduro, 51, who won a vote to succeed late president Hugo Chavez after his death from cancer earlier this year, has been using special decree powers to pass measures as part of what he calls an “economic offensive” against capitalist speculators.
A decades-old problem predating Chavez’s 14-year rule, inflation has hit an annual rate of 54 percent, causing hardship for Venezuelans, deterring people from saving in the local bolivar currency and increasing demand for scarce U.S. dollars.
“The prices (of cars) will be the result of a study of the cost structures and the establishment of a reasonable profit,” read the decree published in the official Gazette.
The government previously said that 15 percent to 30 percent was a fair profit margin. It plans to cap the profits of businesses, some of which it accuses of price gouging.
Although opponents recognize that some businesses are unscrupulous, they say many retailers have been forced to make big price increases because they had to buy high-cost dollars on the black market for imports. Greenbacks sell illegally for 10 times more than the official rate of 6.3 bolivars.
Maduro’s populist measures, including inspections of hundreds of businesses and arrests of dozens of retailers on allegations of “usury,” might help his candidates in a local election on Sunday.
The new automobile regulations let the state fix car prices, and prevent used cars from being sold for more than new ones, a common phenomenon in Venezuela’s high-inflation environment, where vehicles gain value as soon as they leave the dealership.
Ford Motor Co (F.N), General Motors Co (GM.N), Mitsubishi Motors Corp (7211.T) and Fiat SpA’s FIA.MI Chrysler unit, all have assembly plants in Venezuela, and the government is seeking to strike deals with French carmakers Renault SA (RENA.PA) and Peugeot SA (PEUP.PA) to build new factories.
But shortages of both cars and parts is common, with would-be buyers often spending years on waiting lists. The Venezuelan Automobile Chamber says car production fell 29 percent between January and October compared with the same period of 2012.
The decree also allows individual Venezuelans to use foreign currency to import vehicles via a state purchasing company. Cars bought that way cannot be re-sold for three years.
Opposition leaders say the numerous controls in Venezuela’s statist economy are at the root of stagnating growth, shrinking local productivity and shortages.
Economists widely expect a devaluation of the bolivar after the December 8 vote.
Reporting by Eyanir Chinea; Writing by Andrew Cawthorne. Editing by Andre Grenon