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Zimbabwe Autos Report Q1 2012
Business Monitor International, Nov 2011, Pages: 30
Business Monitor International's Zimbabwe Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Zimbabwe's automotive industry.
Zimbabwe's vehicle market is similar to many of its regional peers in that the used car segment accounts for the majority of vehicles on the road. That said, the government has been looking to introduce measures aimed at reducing the number of used vehicles imported into the country, both for the sake of improving safety standards and reducing pollution. The restrictions have been coupled with car loans for civil servants to encourage car purchases, although there may be limits on how far this can boost new car sales.
BMI believes the loans for civil servants will not only address the issue of public workers struggling with living costs, but also give a lift to the autos sector. Some dealers have been voicing frustration at the government's move to ban certain categories of second-hand imports, allegedly without consultation, and also argue that many consumers would be priced out of the market. BMI notes that there is currently no stipulation as to whether the loan must be spent on a new or used vehicle, but given the average price of new cars in the country, we believe the loan is more likely to cover the cost of a second-hand car in reasonably good condition, especially since importing used cars over five years old will be banned from November 1 2011.
Imported used cars form the backbone of Zimbabwe's autos market and although the government has been trying to cut back on what it considers to be the less attractive vehicles, sales have been boosted in 2011 by the latest government budget. The country is witnessing a spike in used vehicle imports, particularly through the Beitbridge Border Post (BBP), as the 2011 budget included a cut in excise duty.
While the reduction in landing costs for an imported vehicle has undoubtedly contributed to growth, rules restricting left-hand drive cars and the earlier expectation of a ban on older imports have forced consumers to bring forward purchases.
In the supplier segment, a ban on sub-standard imported tyres is also under consideration. This could lead to regained market share for the European firms which previously dominated the market. The move is also aimed at lowering the number of accidents caused by unsuitable tyres, and protecting domestic tyre companies. According to Transport Communications and Infrastructure Development Permanent Secretary Partson Mbiriri, a large proportion of cheaper tyres imported into Zimbabwe cannot cope with the rough terrain and burst, leading to a large number of accidents. His department has approached the Ministry of Industry and Commerce and the two ministries will form a committee to investigate the possibility of a ban.
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