ZIMBABWEANS imported cars worth more than US$200 million in the first five months of this year and the continued influx of secondhand cars might force the only two vehicle assembly companies in the country — Willowvale Mazda Motor Industry and Quest — to close down by mid- next year.
WMMI managing director Engineer Dawson Mareya said the situation at the country’s two vehicle assembly companies was so dire that if there is no immediate intervention, they would close down.
“Zimbabweans imported cars worth US$200 million from January to May. This is money that is going to other countries while local industry is suffering. If that amount had been ploughed into the local industry then we would not be talking of any problems,’’ he said
Eng Mareya said the number of
locally assembled cars being sold in the country had fallen from more than 3 000 in 2003 to around 400 by last year.
“The number is still going down and projections show that by mid next year, no locally assembled car will be on the market. While I do not want to raise an alarm, it basically means that there will be no Willowvale or Quest to talk about,” he said.
As a result employment levels in the sector have gone down from more than 20 000 in the late 1990s to below 2 000 at the moment.
“Capacity utilisation in the sector is just around 10 percent resulting in an increase in unit costs,” he said.
The local vehicle market is being dominated by imports mainly from Japan, China and UK. The vehicles are cheaper compared to those that are assembled locally.
Investigations revealed that the situation at Willowvale was sorry as sales and production continue to plummet.
Management at the company has come up with fire-fighting survival strategies that however still do not address the problems associated with production.
Among the strategies which are mainly meant to contain costs are plans to immediately close the factory, implement short-time working shifts and deploy staff to other strategic business units.
The company, according to sources, is also deploying staff to marketing and sales activities to boost sales of units that are already on the market.
Sources said in the process redundant staff will be retrenched although it was not clear whether the company had resources to pay packages.
Vehicle sales at the company have been subdued and information gathered revealed that in March, for example, the company recorded zero sales on Mazda T35, Madza 2.2 Double Cab and HR DC types.
Only eight Mazda 3 vehicles were bought that month while highest sales were of Mazda 2.2 Single cab where 32 units were sold.
The company is also being weighed down by heavy debts after borrowing money from local and international financial institutions.
The effects of the demise of the local vehicle assembly have also weighed down on various other companies whose operations are dependent on the industry.
Some of the companies that have been affected include Deven Engineering which specialises in box bodies for pickups, wheel arches, van bodies, dropside bodies which is now operating at subdued levels.
Loxton Products that used to specialise in seat pads and head rest has downsized and no longer manufactures seats.
Bosal which specialises in exhausts and roll bars is importing to meet local demand. Astra Paints which used to make automotive paints has stopped making the product due to low demand.
Other companies that have directly or indirectly been affected include tyre manufacturer Dunlop, PG Safety Glass, Dulux Paints, Alka Paints, Shell Chemicals, Chloride Zimbabwe, Karina Textiles, James North and Radiator and Tinning.
Some of these companies have shut down, sending thousands of people out of employment.
Experts note that the only solution would be to limit the number of imported cars while capacitating local industry to produce cost effective cars. The Government tried the move last year when it announced it intended to ban the import of cars that were five years old but later rescinded the decision after an outcry from the public.
The Government, argue the experts, can increase duty on imported cars to deter imports.
Zimbabwe levies duty of 25-40 percent for passenger vehicles and 20-40 percent for light commercial vehicles.
Duty has been fluctuating in Zimbabwe, and data shows that before the latest levels, duty to import a one-tonne vehicle was 40 percent in 1997, 90 percent in 1998, 65 percent in 1999 and 60 percent in 2000.
Other countries such as China and Malaysia have pegged their duties at 100 and 300 percent respectively to deter the importation of cars from other countries as a way of boosting local consumption. South Africa has banned certain secondhand cars from being sold in that country.
“There must be a policy that progressively bans all imports of products that can be manufactured locally including pre-owned vehicles,” argued Eng Mareya.