Business Reporter
GOVERNMENT is reviewing factors blighting viability of the motor industry in the wake of the shutdown of Willowvale Mazda Motor Industries last year due to crippling financial woes and the impact of vehicle imports on local productions.
Industry and Commerce Minister Mike Bimha said in an interview yesterday that Government was looking at the entire industry as the challenges were similar.

Zimbabwe’s motor industry is rooted in financial mire due to a combination of factors including cut-throat competition from cheaper used and new vehicle imports.

While the entire motor industry is feeling the heat of stiff competition from imports and the general harsh macro-economic conditions, Willowvale appears to have been hit hardest forcing the company into shutdown last late year.

“We will not just look at Willowvale alone but the motor industry as a whole because the problems are very similar. As a sector, the issues that are prevailing are similar due to the economic conditions in the country,” Minister Bimha said.

“We are reviewing the issues of Willowvale, duties and regulations. We are in the process of reviewing these with the Ministry of Finance and Economic Development.”

Ironically, Government has also not done enough to support local car assemblers considering millions of dollars spent by Parliament and Government departments on vehicle imports against a standing Presidential order. Government controls WMMI through State enterprise, the Industrial Development Corporation. The other shareholder is Itochu Corporation of Japan.

The Presidential order passed on October 11 2002 requires that:   “Given the imperative need to conserve the nation’s scarce foreign currency resources, promote development of the domestic automotive industry and provide support thereto at a time of considerable challenge for industry . . . all vehicles purchased by Government and by other public institutions (including parastatals) shall be procured from local vehicle assembly plants.

While a solution is critical for the entire industry a quick fix solution is required for WMMI, which has been paying its more than 200 factory workers half salaries since going into hiatus last September, which saw its Japanese partner halting kit supplies.

WMMI chairman Mr Ben Kumalo said they have approached our shareholders for recapitalisation. He said shareholders are working on a number of capital raising initiatives including the disposal of non-essential assets.

WMMI’s factory has been closed since September last year. During this period the company had stocks of vehicles it was selling. However, the sales have been low due to the liquidity challenges that are pervading the entire economy.

An average of 7 000 new vehicles are imported into Zimbabwe each year with only 10 percent of these produced by the local assembly plants WMMI and Quest combined  while the balance is all imported, mainly from South Africa.

Second-hand vehicles imports top 53 000 annually from across the world, most of these are life expired and do not comply with global emission standards.

Since locally assembled vehicles compete with life expired imports, which apart  from posing an environmental hazard, some of them are not well supported market wise.

According to WMMI, the 53 000 pre-owned vehicles are imported mainly from Japan, Singapore, Thailand, UK. If the vehicles were produced locally this would be enough to support the two local assembly plants, WMMI and Quest as well as the two bus manufacturing companies, Deven Engineering and AVM.

The South African government has done this successfully for their local automotive manufacturers to a point where the SA motor vehicle manufacturers contribute significantly to export earnings, GDP and employment.

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