GM Likely to Halt Vehicle Production in Venezuela -- Update

By Mike Spector And Kejal Vyas 

General Motors Co. is likely to halt vehicle production in Venezuela this summer amid currency-exchange problems, the Detroit auto maker said in a regulatory filing.

The largest U.S. auto maker cited Venezuelan foreign-exchange regulations that make it difficult for its subsidiaries there to obtain U.S. dollars. The upshot: GM could stop vehicle production in July.

"Absent an ability to obtain U.S. dollars in the near term, which we believe is unlikely, current vehicle production will likely cease in July," GM said in a quarterly financial filing.

A GM spokesman said "production continues in Venezuela and no decision has been made to cease operations. We continue to work with the Venezuelan government to seek solutions to convert currency."

GM makes the Chevrolet Aveo, Orlando and Cruze cars and Chevrolet Silverado pickup truck at a factory in Valencia, the spokesman said.

GM this week began laying off 446 workers at the plant, slashing its workforce by 13%, said Christian Pereira, a spokesman for the local auto manufacturers union. Mr. Pereira says he expects more job cuts to follow. A GM spokesman declined to comment.

Chrysler, now called FCA U.S. LLC and part of Fiat Chrysler Automobiles NV, in December let go of 76 workers. Ford Motor Co. is seeking approval from Venezuelan authorities to reduce personnel by 267, Mr. Pereira said. "It's very difficult," he said. "It's we, the workers, who have to pay for a crisis that we didn't even cause."

The devaluation of currency in Venezuela has bedeviled U.S. auto makers. Ford earlier this year revealed it was taking a big charge for the last three months of 2014 to remove the country's operations from its consolidated earnings.

Car production fell by 73% in 2014, according to the Automotive Chamber of Venezuela, a trade group.

For more than a decade, Venezuela's government has maintained rigid foreign-exchange controls that restrict access to hard currency, making it difficult for multinationals to pay for imports and repatriate dividends. Now, as the oil-rich country suffers from an economic crisis and falling crude prices, it has made fewer dollars available to the private sector, with the automotive industry suffering one of the biggest hits.

The automotive sector suffered a 78% drop in dollar allocations from the government to $264 million in 2014, compared with the previous year, according to Caracas business consultancy Ecoanalitica. This year, the sector is expected to see no more than $130 million.

Write to Mike Spector at [e-mail] and Kejal Vyas at [e-mail]

Access Investor Kit for Ford Motor Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US3453708600

Access Investor Kit for General Motors Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US37045V1008

Subscribe to WSJ: http://online.wsj.com?mod=djnwires