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Last Update: 5:51 PM ET Jul 21, 2006

By Raul Gallegos
CARACAS (MarketWatch) -- Chinese automobile manufacturers are seeking a share of Venezuela's car market, which has grown with the help of an oil-fueled consumption boom.
President Hugo Chavez has long been trying to foster greater economic ties with the Asian giant. On top of greater energy and mining sector cooperation, Chavez has also pursued Chinese development of a computer assembly line in the Andean nation.
The automobile sector is now gaining traction.
Two Chinese car dealers have recently set up showrooms across Venezuela to try and compete with more established brands.
Great Wall Motors, China's largest car maker,is offering large utility vehicles.
The second, Cinascar, a Chinese automobile dealership owned by GM Daewoo Auto & Technology Co., a unit of General Motors Corp. (GM) based in South Korea, began selling vehicles in March and now has 17 showrooms across the country.
The company offers vehicles from six different Chinese car makers, including cars by Chery Automobile Co., a state-owned Chinese company that specializes in economy cars.
"We just started, but we sold 300 vehicles just last month," said Karen Frances, head of sales for Cinascar's main distribution center.
Chery's QQ model, has made up almost 50% of the cars sold, Frances noted.
The QQ, a four cylinder, four-door compact vehicle sells for as little as 19 million bolivars ($8,837), cheaper than Chevrolet's Spark, its nearest competitor.
U.S. car manufacturers including GM and Ford Motors Co. (F) assemble vehicles in Venezuela and make up the bulk of the vehicles sold every month.
Some of these vehicles, considered "family cars," receive a tax exemption from Venezuelan authorities.
New car sales in the Andean country climbed 44% to 140,417 units during the first half of the year, compared to the same period in 2005, according to figures from the Cavenez automobile chamber.
Sales of imported cars in particular have also seen a dramatic climb in Venezuela as the crude-rich country continues to enjoy the benefits of record oil prices.
Loans for car purchases grew sevenfold to roughly $1 billion from 2003 to 2005, according to Softline Consultores CA, a local banking research firm.
In times of oil wealth Venezuelans turn to consumption of large ticket items, especially cars.
Demand of late has forced buyers to sign up on waiting lists for months to buy new vehicles. Customers are often forced to forego the car model and color of their choice for whatever is available.
The car craze has been known to also foster a market for bribes in which sales agents will sometimes demand an under-the-table payment from clients to secure the model and color the client wants.
The excessive demand and short supply are further affected by the troubles car assemblers face trying to obtain dollars from the country's currency authority to import the needed car parts for production.
In 2003, Chavez imposed capital controls on the economy forcing companies and individuals to buy U.S. currency from the government, another complication for the auto market.
Excessive liquidity in the economy has also pushed banks to lend money at increasingly attractive interest rates.
"Banks have become really aggressive at lending money for car purchases. There's a lot of money in the economy so car sales will continue to climb," said Jose Grasso, head of Softline.
Venezuela's soared 9.4% in the first quarter of 2006. Economists estimate economic growth will run between 6% and 8% this year.

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Sileale said:
Transportation is the issue. Normaly takes almost 45 days and costs around US$ 1,000 per car in roro shipment.
In case anybody else has different numbers, please step foward.
i dont know about your , $1000. in canada you only pay around $500-700 us for the delivery fee per vehical. and that is after all the middle mens.
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