Business / Economy
Zimbabwe to promote local assembly of vehicles
11 Aug 2014 at 13:13hrs | Views
ZIMBABWE is to push through a policy promoting the importation of knocked-down vehicle kits and impose higher tariffs on imported vehicles, which are shipped mostly through South Africa and Namibia.
Finance Minister Patrick Chinamasa said last week that this measure was aimed at enhancing the motor assembling industry's capacity and boost employment in the country. Zimbabwe is battling to tame an unemployment scourge that has characterised the worsening economic situation.
However, Zimbabwean motor industry players have raised concern that the measure was aimed at protecting struggling vehicle assembler Willowvale Mazda Motor Industries. The other notable motor assembly company in the country is Quest Motor.
South Africa's neighbour does not manufacture vehicles but has several dealerships although Nissan recently terminated its dealership in the country due to the acquisition of 97.91 percent of Nissan Zimbabwe's parent company, CFAO, by Toyota Tsusho, according to a letter from Nissan.
The South African unit of Nissan has now partnered with local traders for the distribution and provision of back-up services for Nissan vehicles.
The Zimbabwean government has a stake in Willowvale Mazda Motor Industries, which has recently hit hard times.
The government of President Robert Mugabe is now pushing for a policy that will promote importation of vehicle assembly kits as opposed to the importation of already assembled vehicles..
"We should allow those [vehicles] which come in parts and allow Willowvale and Quest Motor to assemble," Chinamasa said.
He also said vehicle franchises and dealerships should "insist with the manufacturer to send you knocked-down kits", saying that this was a policy "direction we are going".
This policy has immediately been supported by executives at Willowvale Mazda Motor Industries. A senior executive at the company, engineer Dawson Mareya, said it was important for the motor industry in Zimbabwe to be capacitated by the public procurement system in Zimbabwe to help it recover.
"We want to assemble vehicle products for the local market as a way to create employment and grow the revenue base for the government. We however are willing to complement that production through imports which will cater for the other categories of the market," he said.
Other motor industry players said it was important to leave the door open for imports of fully assembled vehicles as the local car assembly industry was unable to meet demand.
Analysts at Business Monitor International (BMI) said in a recent report on Zimbabwe's auto industry that "the vehicles market will continue to rely on businesses for much of its growth". It said "private consumers were likely to continue to opt for imported used cars" because of the "price differentiation between new cars and used cars".
New vehicles cost on average $20 000 (R213 194) while imported pre-owned vehicles cost on average $4 500. The imported vehicles are brought into the country through ports at Durban and Walvis Bay.
The Zimbabwean motor industry is now dominated by dealerships and private importers selling pre-owned vehicles mostly shipped from Japan and the UK. Other vehicles are also imported from Singapore.
"In order to fully back up local industry we must have local content of as much as 58 percent going into the vehicles we assemble here. But as of now, the local supply chain is not there," Croco Motors general manager for sales said.
Croco Motors recently landed a contract to supply government officials with top-of-the-range vehicles. However, the government has been criticised for not advancing the money to vehicle assembly companies which could have benefited from capacity and production ramp-up.
Zimbabwean motor industry executives say public sector vehicle procurement accounts for about 70 percent of the vehicle market in Zimbabwe. The private and individual markets mostly imported on their own or through agents.
Finance Minister Patrick Chinamasa said last week that this measure was aimed at enhancing the motor assembling industry's capacity and boost employment in the country. Zimbabwe is battling to tame an unemployment scourge that has characterised the worsening economic situation.
However, Zimbabwean motor industry players have raised concern that the measure was aimed at protecting struggling vehicle assembler Willowvale Mazda Motor Industries. The other notable motor assembly company in the country is Quest Motor.
South Africa's neighbour does not manufacture vehicles but has several dealerships although Nissan recently terminated its dealership in the country due to the acquisition of 97.91 percent of Nissan Zimbabwe's parent company, CFAO, by Toyota Tsusho, according to a letter from Nissan.
The South African unit of Nissan has now partnered with local traders for the distribution and provision of back-up services for Nissan vehicles.
The Zimbabwean government has a stake in Willowvale Mazda Motor Industries, which has recently hit hard times.
The government of President Robert Mugabe is now pushing for a policy that will promote importation of vehicle assembly kits as opposed to the importation of already assembled vehicles..
"We should allow those [vehicles] which come in parts and allow Willowvale and Quest Motor to assemble," Chinamasa said.
He also said vehicle franchises and dealerships should "insist with the manufacturer to send you knocked-down kits", saying that this was a policy "direction we are going".
This policy has immediately been supported by executives at Willowvale Mazda Motor Industries. A senior executive at the company, engineer Dawson Mareya, said it was important for the motor industry in Zimbabwe to be capacitated by the public procurement system in Zimbabwe to help it recover.
"We want to assemble vehicle products for the local market as a way to create employment and grow the revenue base for the government. We however are willing to complement that production through imports which will cater for the other categories of the market," he said.
Other motor industry players said it was important to leave the door open for imports of fully assembled vehicles as the local car assembly industry was unable to meet demand.
Analysts at Business Monitor International (BMI) said in a recent report on Zimbabwe's auto industry that "the vehicles market will continue to rely on businesses for much of its growth". It said "private consumers were likely to continue to opt for imported used cars" because of the "price differentiation between new cars and used cars".
New vehicles cost on average $20 000 (R213 194) while imported pre-owned vehicles cost on average $4 500. The imported vehicles are brought into the country through ports at Durban and Walvis Bay.
The Zimbabwean motor industry is now dominated by dealerships and private importers selling pre-owned vehicles mostly shipped from Japan and the UK. Other vehicles are also imported from Singapore.
"In order to fully back up local industry we must have local content of as much as 58 percent going into the vehicles we assemble here. But as of now, the local supply chain is not there," Croco Motors general manager for sales said.
Croco Motors recently landed a contract to supply government officials with top-of-the-range vehicles. However, the government has been criticised for not advancing the money to vehicle assembly companies which could have benefited from capacity and production ramp-up.
Zimbabwean motor industry executives say public sector vehicle procurement accounts for about 70 percent of the vehicle market in Zimbabwe. The private and individual markets mostly imported on their own or through agents.
Source - Busrep
