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Martin Kadzere
Local vehicles production has plunged to unprecedented levels, with Willowvale Motor Industries (WMI), not recording any production in the last five months due to low demand and foreign currency shortages, according to latest Government report on state of industries.
The report, done by the Ministry of Industry and Commerce on the state of industry during the lockdown period, reveals the motor industry is one of the sectors whose distress has been compounded by the global coronavirus pandemic, which has so far killed about 780 000 people and infected nearly 22 million.
Overall, the report noted industrial capacity utilisation has been badly affected due to lockdown restrictions meant to curb the spread of coronavirus. Zimbabwe introduced lockdown restrictions in March meant to limit the spread of the deadly virus.
According to the Government report, Mutare based vehicle assembler, Quest Motors, is operating at 5 percent capacity. The firm produces Zhontong 56 Seater busses, FotonTunland double cabs, Tunland single cabs, three tonne JMC light trucks and five tonne JAC light trucks.
Coach builder, AVM Africa, registered a 90 percent reduction in production during the past five months due to closure of markets for buses such as schools, intercity and rural buses, the report noted.
While the demand for urban transport buses is high, ZUPCO the state owned public transport operator, is buying mainly from China.
Despite the existence of an export market for busses, the local producer cannot compete with Chinese suppliers who offer credit terms of 180-360 days.
The local suppliers cannot do the same due to exchange control regulations that require them to get full export receipts within 90 days.
WMI has not had any production of new vehicles since the lockdown began due to challenges existing even before the restrictions as there is no offtake for locally assembled vehicles, the report said.
“The foreign currency auction system has, however, enabled the company to access foreign currency,” the report said.
Zimbabwe has also been facing a shortage of foreign currency largely resulting from subdued export capacity and lack of foreign direct investments.
The shortage of foreign currency has seen the country struggling to pay for essential imports such as medical drugs, fuel and electricity.
In May this year, WMI said negotiations to assemble Nissan vehicles at its plant had been hindered by low demand of new cars and foreign currency shortages.
At its peak, WMI was producing 18 000 units per year before production. Some of the brands, which the company produced include Mazda, Nissan, Mitsubishi and Toyota. In 2017, the company entered into a joint venture with Chinese firm to assemble cars from semi-knocked down kits.
The partnership resulted in the formation of Baic Zimbabwe, a joint venture between Chinese fifth largest car maker, Beijing Automobile International Corporation and Willowvale Motor Industries.
Analysts say given low incomes being earned by the majority, the affordability of new vehicles would remain a challenge in the short to medium term.
Between 2009 and 2016 (when the US dollar was a reference currency), Zimbabweans spent as much as US$4,5 billion on second hand cars, or an average US$566 million per year, according to Zimbabwe National Statistical Office.
In 2018, the Government launched Motor Industry Policy, which seeks to attract foreign direct investment into the local automotive industry.
Online Reporter