GM ceases Venezuelan operations after asset seizure

General Motors Says Venezuelan Authorities Illegally Seized its Auto Plant

General Motors says Venezuela illegally seizes auto plant

On Wednesday, the factory was "unexpectedly seized by the Venezuelan authorities, preventing normal operations", GM's spokesperson in Brazil, Julia Bastos, said Thursday in an email. "General Motors tonight saying it's been forced to suspend its operation in Venezuela after the government there confiscated its factory", announced ABC Anchor David Muir during World News Tonight, "GM forced to lay off 2700 workers, but vowing to fight this tonight". GM says that the plant had stopped making cars recently, presumably due to deteriorating economic conditions. The company says it will defend itself legally and it's confident that justice eventually will prevail.

General Motors Venezolana, GM's local subsidiary, was established in 1948 and employs about 2,700 workers and has 79 dealers in the country.

The Venezuelan government, which frequently blames big business for the country's economic crisis, hasn't commented on the move, which took place amid deadly nationwide antigovernment protests.

GM can seek compensation and damages for its lost plant in several different worldwide venues, said Nigel Blackaby, a lawyer at the Freshfields Bruckhaus Deringer law firm, which has battled Venezuela in several high-profile cases in global courts.

GM has been in Venezuela for 69 years.

Bridgestone joined other foreign multinationals including Halliburton, Ford Motor and Procter & Gamble who have either slowed or abandoned their investments in Venezuela.

RASCON: The Venezuelan economy has been in free-fall for years after oil prices collapsed, leading to widespread shortages of food, water, medicine and other essentials.

Other automakers have struggled in the country as it has become more hard to access US dollars and import essential mechanical parts.

The American auto company said authorities took over the factory on Wednesday and started taking cars from it.

GM will continue to provide aftermarket service and parts for its customers through its dealers, it added. In the second quarter of 2015, the company took a $720 million charge for currency devaluation and asset valuation write-downs as the economy faltered. A growing number are taking their Venezuelan operations out off their consolidated accounts. GM sold just over 583,000 vehicles in the region past year, but that was only about 6 percent of its total sales.

General Motors Company may have been expecting this negative result.

Shares of GM traded up about 0.8% Thursday morning, at $34.06 in a 52-week range of $27.34 to $38.55.

Latest News