Venezuelan President Threatens To Nationalize Toyota

CARACAS, Venezuela — Venezuelan president Hugo Chávez has threatened to nationalize Toyota Motor's assembly plant and turn it over to a Chinese company. The incendiary statement came as Chávez accused Toyota of failing to produce enough vehicles appropriate for rural areas of the South American country. He made the same threat to Fiat and General Motors, which also operate plants in the country and also said the international automakers are not transferring enough of their corporate new technology to local plants.

The Wall Street Journal quoted Chávez as saying in a televised speech that his trade minister will inspect the Toyota plant and if it doesn't meet standards, "We'll take it, we'll expropriate it, we'll pay them what it is worth and immediately call on the Chinese." Toyota built some 13,000 vehicles in Venezuela last year, the paper reported.

The threat appears less idle in that the Chávez administration has already nationalized electrical, cement, coffee and oil services and many foreign-owned companies. However, industry watchers say the government is mainly looking to gain favor from the Venezuelan public by criticizing auto companies amid a recession and a shortage of cars for sale in the country. Toyota itself threatened to leave Venezuela earlier this year amid union problems after more than a half-century in the country.

Toyota is preparing to launch an ultra-low-cost car for emerging markets that will be sold in India and Brazil. Such a product could meet the demand for a vehicle better suited to the Venezuela market. There are no plans to sell the car in Venezuela at the moment.

Inside Line says: The inflammatory speech doesn't appear useful either to the consumer or the industry it's aimed at. — Laura Sky Brown, Correspondent