Mexico's currency has been devalued more than 40% against the U.S. dollar, and companies distributing in the country are having trouble finding buyers for their suddenly costly goods.
Consumers "don't need a TV set," said Sony Electronicos de Mexico General Director Koichi Nakamura. "They need food."
Sony estimates first-quarter sales will be down by about one-third from initial forecasts.
Before the crisis, Wal-Mart Stores had planned to open 12 Sam's Club warehouse stores and 12 Wal-Mart "supercenters" in Mexico. Last week, a spokesman said: "We do have some projects temporarily on hold."
While Wal-Mart and its Mexican partner Cifra won't quantify their slowdown, Mexican retailer Comercial Mexicana grimly laid out just how bad it expects things to be. Instead of the 38 stores planned for this year, the chain will open only six.
Procter & Gamble Co. Chairman-CEO Edwin L. Artzt said last week that Mexico's government is allowing multinational marketers to increase prices 10% in some categories to offset the devaluation. "Despite the price freeze, Mexico has been cooperating .*.*. The increase will probably reach 30%" for P&G over the next few months, Mr. Artzt said.
Automakers, not surprisingly, have suffered heavily. Chrysler Corp. said Mexico sales have dropped as much as 70% since the plunge.
Ford Motor Co., distributing Canadian-built engines and U.S.-built Escorts, Explorers and Grand Marquis models in Mexico, said most of the public can't ignore such an unfavorable exchange rate.
"It's been disruptive to our business," said a Ford spokeswoman. "We're filling the orders that come and we're supplying the necessary components, but the market's very weak, and the number of orders is next to nothing."
The peso crisis came at the height of the Christmas shopping season, giving Mattel the holiday blues.
"Retailers pay us in pesos, so we lose on the exchange rate for intercompany transactions," said Glenn Bozarth, Mattel VP-corporate communications.
Mattel estimates the crisis will cause it to scale back 1994 Mexican earnings projections by $20 million. Prior to the devaluation, Mattel expected Mexican sales of more than $100 million.
The Clinton administration has proposed a $40 billion loan guarantee program to help the Mexican economy, but late last week it was far from certain Congress would approve the measure.