Skyrocketing inflation and continued sanctions have put Venezuela’s economy in shambles.
According to the Washington Post, the South American nation has one of the highest inflation rates in the world, at a staggering 63%.
Yet amid these sluggish, bearish conditions, there is a glimmer of economic growth in Venezuela — its used car industry. In just the last year, the value of used cars has more than doubled due to car plants dramatically slowing or halting production of new cars. Imports of new cars have largely ceased, as well.
A base-model 2012 Toyota Corolla is now worth $40,000 U.S. dollars in Caracas, a 100% jump in value since January.
“I think this must be the only country in the world where a car drives out of a dealership and goes up in value,” Rosa Rosales, sales manager at a Caracas car lot, said.
What’s most shocking is that these used cars aren’t being bought and sold to be driven; rather, for Venezuelans, the truly scarce resource of cars provides a safe harbor for one’s life savings. Instead of storing their money in a cardboard box under the mattress, Venezuelans are storing their money in used cars.
This used car market isn’t sustainable — given the fact that 85% of all vehicles require a repair or maintenance, it won’t be long before all the country’s used cars reach the ends of their lifespans. Considering the fact that Venezuela’s car plants are on track to manufacture just 15,000 new vehicles this year, the country will eventually run out of usable vehicles.
A new partnership between Venezuela and China might help alleviate this problem, however. According to Shanghai Daily, ZGT, a Venezuelan-Chinese automaker, has manufactured more than 40,000 new Chinese-brand vehicles within Venezuela since the beginning of the joint venture.
With the influx of new vehicles from ZGT, there will be more jobs across all levels of the automobile industry, along with tens of thousands of affordable vehicles for Venezuelans. Joint partnerships like these might be the first steps on the road to Venezuela’s economic recovery.