Car market remains stagnant

Lawrence Chitumba Review Writer
Second hand car dealers and the public in Harare say that the slashing of prices for pre-owned vehicles by South African car dealers close to Beitbridge has had no visible impact on the used vehicles market.

This is because the Zimbabwe Revenue Authority is not reducing duty on vehicles on sale on the South African side.

“The slashing of prices for pre-owned vehicles by South African dealers has absolutely no effect on our business here because naturally prices of those vehicles won’t be less because ZIMRA is not in agreement with the dealers to have duty reduced on cars bought cheaply on the SA side.

“If ZIMRA agrees to charge less duty on cars bought cheaply, then of course we will experience problems with our sales because cars would surely be cheap down there, “said Mr Tich Mushokore of Ferguson car sales which is at the National Railways complex.

South African dealers at the Beitbridge border post recently reduced the price of pre-owned vehicles from Japan, Singapore and the United Kingdom as they battle to clear huge stocks caused by low business.

The move by car dealers is aimed at meeting their obligations with South African Revenue Authority to sell the vehicles within 12 months. One of the dealers yesterday said that in the event that they violated the conditions of the of the bond with (SARS), they would be fined R20 000 per vehicle.

“The prices of ex-Jap vehicles remain the same. The prices are already cheap because of liquidity issues. Either you can afford a car or you cannot. This has not made any difference. The difference of $300 and $500 from the buying price in SA would not really push people to rush down there to get a car,” said Mr Tawanda Nechironga who was looking to trade in his Toyota Harrier for a Toyota IST as a used car lot in the CBD.

Mr Tapiwa Nyagura of Starben cars sales said sales figures have remained the same and the dealers have not felt the pressure to lower prices.

“So far we have not yet experienced any problems with the move of reducing the prices of second hand vehicles as long as there is no agreement with ZIMRA to reduce duty on those vehicles.

“But the moment they are going to have an agreement on the reduction of duty, then we will have a problem which might even force us to make a downward review of our prices which will mean a loss on our part,” he said.

An marketing executive with a fast moving goods chain, Mavis Muchemwa said the Government should not just raise taxes to protect local industries without capacitating them to service the market at all levels.

“Look at the cars that are being made in this country. The cheapest of the them is over $10 000. Even if you are to buy on credit you still need a deposit that would buy you a serviceable used vehicle. In addition you would still have high monthly repayments for 24 to 36 months. If you can afford to pay over $300 for a car for that period then you are not among the majority of us whose monthly income is less that $1 000 a month,” said Muchemwa.

She drives a branded company vehicle and says she would like a set of personal wheels for weekends and private business.

Second hand car sales started to decline after Finance and Economic Development Minister Cde Patrick Chinamasa increased surtax from 25 percent to 35 percent on second-hand light passenger motor vehicles aged more than five years from the date of manufacture and the time of importation.

This measure was put in place to protect the local motor industry from cheap second hand imports from Asia and the UK.

Moses Muparadzi from Cannon Motors- a big brand in the Southern African car sales industry said the Government needs to put in place policy measures that would insure that new vehicles are affordable to ordinary Zimbabweans.

“We do not have problems in sales as result of the slashing prices on second hand cars when it comes to new cars but the problem may come with second hand cars. However, stakeholders in the industry must do something to make new cars affordable to all Zimbabweans,” he said.

Officials at Croco Holdings said that the issue of second–hand vehicles is not affecting their business because they deal with brand new vehicles only and people wishing to buy second hand vehicles usually have monies way below what is required to deposit a new vehicle. However they said what was needed were measures to make new vehicles affordable.

Mr Theo Diaskoris who is the national sales manager with Quest Motor Corporation also shared the same sentiments with other new car dealers but said Government and financial institution have to come up with policies that enable ordinary Zimbabweans to afford new vehicles.

“My opinion is that banks and other financial institutions have to come to the party and partner Government to draft a policy which would allow people to buy new cars on credit, for example, look at what happens in South Africa. That way we would be promoting the growth of the local motor industry.

“Government could also sit down with those companies in SA that are importing new vehicles into the country and tell them that they should at least establish plants here manufacturing for example, wind screens, suspensions etc and employ Zimbabweans. That way Zim-Asset would come to fruition as we would have created employment which would enable the people to purchase locally produced new cars and in the process revitalise the industry, “he added.