Venezuelan authorities suddenly seized a General Motors plant in Venezuela on Wednesday, forcing the company to halt its operations, in a move that broadens the international implications of Venezuela’s political and economic instability.
The move puts a sudden end to GM’s operations in the country. The world’s third largest automaker assailed the takeover Wednesday as an “illegal judicial seizure of its assets.”
“GM (Venezuela) strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights,” the automaker said in its statement.
Automakers, including GM, Ford and Fiat Chrysler Automobiles have struggled to make money in Venezuela in recent years as the economy has weakened and political instability has risen. GM has reduced the estimated value of its operations there and automakers have reached deals with the government to allow the sale of vehicles to customers using a mix of foreign and local currency.
Arndt Ellinghorst, an automotive analyst for Evercore ISI, said the impact on GM’s finances may be minimal since the company didn’t expect to sell many cars there this year.
Indeed, GM’s stock price rose 19 cents, or 0.5%, to $33.99 in morning trading on the New York Stock Exchange.
Still, the seizure comes as the South American nation experiences intense public protests against the government of President Nicolas Maduro. Three people were killed late Wednesday as tens of thousands of Venezuelans took the streets to demand fresh presidential elections and the release of jailed opposition politicians.
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The country has high crime and inflation rates and there are shortages of many basic goods and services. It is oil-rich but cash-poor. Maduro has used his Socialist government’s institutions to pursue political opponents.
Secretary of State Rex Tillerson said yesterday that the U.S. is monitoring the situation closely.
“We are concerned that the government of Maduro is violating its own constitution and is not allowing the opposition to have their voices heard, nor allowing them to organize in a way that expresses the views of the Venezuelan people,” Tillerson said during a press briefing.
Relations with the United States have been tense in recent years, although Maduro’s anti-American rhetoric has softened since President Trump took office.
GM and other automakers have been experiencing problems in Venezuela caused by the country’s shaky economy for some time.
GM’s revenue in South America has dropped from more than $13 billion in 2014 to $7.2 billion last year primarily because of falling sales in Brazil and Venezuela, according…