Government mulls vehicle import restriction

Source: Government mulls vehicle import restriction | The Financial Gazette June 29, 2017

By Kenneth Matimaire

MUTARE — Government is planning to restrict the importation of vehicles to protect and resuscitate the country’s ailing motor industry, Finance and Economic Development Minister Patrick Chinamasa has said.

The proposed measures would result in government increasing duty on all imported vehicle models similar to those that are locally assembled, or including the vehicles on the list of products banned from import under Statutory Instrument (SI) 64.

SI 64 was introduced by government last year to restrict the importation of goods that are available locally, as part of efforts to resuscitate ailing industries and reduce the country’s trade deficit.
Zimbabwe has three vehicle assembling firms in the country — Quest Motor Corporation, the State-owned Willowvale Motors Industries (WMI) and AVM Africa.

WMI, which closed shop in September 2012, recently partnered with China’s fifth largest car manufacturer, the Beijing Automobile International Corporation (BAIC) and Astol Motors, to form Beiqi Zimbabwe.
Quest resumed operations in 2009 after suspending business during the hyper-inflationary era.
The two assembling plants assemble Chinese and Japanese vehicles.

Chinamasa told The Financial Gazette in a telephone interview that government was seriously considering reviving the sector by restricting vehicle imports.

He said the Ministry of Industry and Commerce would soon assess the capacity of local vehicle assembly companies to meet national demand before implementing the proposed measures.
“Clearly, the intention is essentially that we will give protection to locally assembled vehicles, which means hiking tariffs or putting the sector under a measure similar to SI 64 to protect locally assembled motor vehicles. There will be no total ban as such,” Chinamasa said.

He said before introducing the protective measures, government would make sure that the local vehicle assembling plants had the capacity to satisfy or produce for local consumption.
“And that exercise is not done by the Ministry of Finance, but the Ministry of Industry and Commerce. They know the capacity at different manufacturing companies or assembling companies; they are in direct touch with the assemblers, not Ministry of Finance,” said Chinamasa.

The proposed measure would see government restricting the importation of BIAC Great Tiger vehicles assembled at WMI and Foton Daimler pick-ups, Foton Tunland double cabs, Foton tippers and tractors, Z-Tong Buses (Quest Buses), JMC, Chery Q and Tiggo vehicles from China.
It would also restrict the import of Japanese models that include Mitsubishi Triton, Pajero Sport, Toyota Revo and Suzuki Carry assembled at Quest.

Quest, which requires capitalization, has for some time struggled due to lack of legislative and market support from government.

Government and State institutions such as the Zimbabwe National Army (ZNA), Central Intelligence Organisation (CIO), Zimbabwe Republic Police (ZRP), and Air Zimbabwe among others have relied on imports for their vehicle requirements.

Vice President Emmerson Mnangagwa has publicly acknowledged that government could transform the fortunes of the motor industry by acquiring vehicles from local manufacturers.

Chinamasa said the country, which has been experiencing recurrent trade deficit in the past few years, needs to have confidence in locally-made products as a way of reviving industry.
In terms of capacity, Beiqi Zimbabwe can assemble 3 000 units in the next three years while Quest can produce 500 buses and 10 000 vehicles per annum.

AVM Africa has capacity to assemble 120 buses, 50 trucks and 200 vehicles per month.
Trucks dominate the market share in Zimbabwe at 68 percent, followed by sedans at 12 percent and sports utility vehicles at 15 percent, according to a research by BAIC.

However, Chinamasa pointed out that pricing would be a major consideration, with local assemblers charging uncompetitive prices.

“We have had discussions with them and we have indicated to them that we want to restrict the importation of vehicle they assemble. But the major concern is that of pricing of the vehicles.
“We still need to iron out issues related to costing of the vehicles,” he said.
For example, the Chery QQ, which is the lowest priced vehicle at Quest Motors, costs $9 500.
Chery QQ is almost similar to a Nissan March or Toyota Duet in terms of size.
The industry, however, argues that prices would come down if their output increases.

“Our pricing is pushed upwards because we are not pushing high volumes, marketwise. We have operating costs that we need to cover and at the same time break even. So, if demand for our vehicles increases, we will be in a position to lower our prices to much more affordable rates,” Quest director, Tarik Adam, recently told the Parliamentary Portfolio Committee on Transport and Infrastructure.

Industry Minister, Mike Bimha, has previously attributed the challenges affecting local assemblers to the import of used vehicles.

Available statistics from the Zimbabwe National Statistics Agency, highlights that $250 million worth of vehicles were imported in the first half of 2016, while $452 million was spent in 2015 and $469 million in 2014.

Bimha is currently working on a Motor Vehicle Development Policy, which will prioritise the acquisition of vehicles from local assemblers.