admin
Few Zimbabweans will be surprised at vehicle imports totalling almost $5 billion since 2009 although the huge surge in imports has died down a bit and are likely to be under $500 million this year. The huge surge in imports, especially during 2010 to 2012, was the direct result of the very hard times experienced during the hyperinflation in the first decade of this century.
Little could be imported and vehicles were no exception. By 2009 there was a large pent-up demand.
This was seen in imports crossing the $1 billion barrier in 2012, although latest figures now show the regular demand to be about half that figure. Imports have declined basically because a lot of people who could afford a car now have one and are keeping it on the road rather than replacing.
We need to look at some of the positive results of this massive increase in the number of vehicles on the road. Many jobs have been created, new businesses supplying spares, services, tyres and the like have grown rapidly and generally there are thousands of people now earning their living in the motor trade in one way or another.
But a great deal more jobs could be created and our industrial base enhanced if there were fewer imports and more assembled locally.
A major cause of the surge in imports was the readily available supply of cheap second-hand Japanese cars in reasonable condition. Due to a quirk in Japanese industrial policy it is almost impossible to drive a car more than five years old in Japan. At the same time the system there requires regular servicing. So cars about half-way through their economic life are readily available at low prices.
New cars were bought by a minority. And even here imports were preferred over locally assembled vehicles. While some quote pricing as a reason, it was likely that the lack of choice and the limited capacity of the local plants was a far more likely spur to imports.
The most popular makes were not assembled locally and one plant, Willowvale Mazda, only assembled vehicles from one manufacturer, and one not in the top tier globally. Quest in Mutare, operating as a contract assembler, did better commercially because it could offer a wider range, but even here we think there was a lack of imagination and an over-concentration on producing fewer high-margin large vehicles rather than more lower-margin and cheaper vehicles.
Even now only a small fraction of what looks like the sustainable expenditure of $500 million a year on new cars or at least good second-hand imported additions to the national fleet is going to the two assemblers.
We think that both need to rethink their strategies, especially Willowvale with its reliance on a single brand. If the assemblers could manage to produce a reasonable, if not luxurious, vehicle with a drive-away retail price under $10 000 they could start making some serious inroads into the market, competing not only against new car imports, but also against second-hand imports.
Such a model cannot be impossible to find. Other countries manage it. A new car can be sold with guarantees and if sellers can be truly innovative with financing then a lot more of the market opens up.
The ultimate goal must be to do what happens in much of the world. People pay a fixed sum each month, say $300, for four or five years. For that they get a new car, servicing, insurance and finance costs. They do not have to worry about sudden large bills. Everything works automatically. A modern car is normally not heavy on spares for its first few years and the odd glitch is only a small percentage of all cars sold, so the costs can be calculated in.
We think a large part of the problems faced by local assemblers is of their own making. They need to find ways of competing successfully and then use the odd fiscal measure on customs duties and the like to lock in the competitive advantages they find, rather than create them. Business in Zimbabwe is no longer a gift.
It requires innovation and hard work. But some have succeeded well in many areas. Car assemblers need to join that group.
Online Reporter