- Language: English
- Published: June 2012
- Region: Africa, East Africa
Tanzania Autos Report Q1 2012
- ID: 1991032
- November 2011
- Region: Tanzania
- 24 Pages
- Business Monitor International
Business Monitor International's Tanzania Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Tanzania's automotive industry.
Although Tanzania has the second highest projected average annual GDP growth over the next five years among the East African countries under review, it also has one of the lowest levels of car ownership. This suggests that there is considerable potential to be tapped in the Tanzanian new vehicle market, which is reflected in our largely positive forecast for the next five years. We have penciled in lower growth as the period continues, as the market is starting from a relatively low base, following restrictions on the allocation of foreign exchange for vehicle imports in the 1970s and 1980s which put artificial restrictions on the market's growth.
The economy is showing incredible resilience in the face of rising inflation and a weak currency, reflected in healthy growth in imported consumer goods. Data from the Bank of Tanzania for the 12 months to May 2011 show a 29.5% increase in imports of consumer goods. However, we believe the majority of new vehicle purchases will be made by companies and government departments and for most private consumers, used cars will still be the most accessible route to car ownership. There is no upper age limit on used imports to encourage a switch to new alternatives, but a 20% tax on cars over 10 years old has been applied to models being directly imported from Japan.
Japanese vehicles are also among the most popular new brands on sale in the country. Toyota Motor has had a presence in the country since local dealer International Motor Mart (IMM) was named as the exclusive distributor for the brand in 1965. In the second-hand segment too, the preference for Japanese brands attracted investment from Japanese used car distributor Yuasa Impex.
There are also signs of production investment in the industry, as India's Bajaj Auto announced the start of local assembly of its two- and three-wheelers in September 2011. The company has been selling its vehicles through local dealer Fair Deal Auto for around 18 months, and after raising monthly sales from 200 units to nearly 1,000, Bajaj has invested US$20mn in its own plant in Mikocheni. The project is reportedly part of a bigger US$250mn investment by Bajaj and several other Indian companies which will create 6,000 local jobs.
This follows news in late 2010, also in the motorcycle segment, that fellow Indian manufacturer Hero Honda is carrying out market research in Tanzania, which it believes will be a receptive market for products aimed at the rural population. As an example of companies from emerging markets (EMs) expanding globally, it meets one of BMI's core views for the industry, as well as underlining the trend for growth in India's rural autos market, which will act as a blueprint for the company. SHOW LESS READ MORE >
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