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Tinashe Makichi Business Reporter
Local vehicle production continues to deteriorate with the industry recording an 88 percent drop to 2 000 units per annum this year from 18 000 units produced in 1997 as local producers continue to face viability constraints due to subdued foreign direct investment in the sector. Presenting findings of the study done on the status of the motor vehicle industry yesterday, Competition and Tariff Commission chairman Mr Dumisani Sibanda said assembly plants in Zimbabwe have been operating at below 20 percent for over a decade.

“The new vehicle market shrank from a high of about 18 000 units per year in 1997 to below 2 000 units to date. Second-hand vehicle imports (both passenger and commercial) have been on the increase since 2006, posing a threat to the viability of the motor industry,” said Mr Sibanda.

He said there was need for Government to chip in with relevant policies for original equipment manufacturers to keep up with technological developments and meet the changing customer needs as well curb unfair competition from South Africa.

Mr Sibanda said local producers should focus on the production of a narrow range of high volume models in order to achieve efficient utilisation of their production facilities.

The local industry is failing to assemble entry level passenger cars (1,0-1,5 litres size engine), one- tonne diesel pick-up trucks (workhorse) and 3-5 tonne commercial trucks.

Assembly plants in Zimbabwe only assemble one-tonne pick-ups, double cabs and petrol passenger vehicles with two-litre engines.

Mr Sibanda said corporates and particularly ordinary citizens are now relying on second-hand cars from Japan and other Asian countries thereby leaving local producers redundant.

In the findings, Mr Sibanda said there should be no further increase in duty rates on imported vehicles as the current rates of between 40-60 percent give the local assembly more than adequate protection.

He recommended that duty rates above 25 percent should be reduced particularly for vehicle types not currently assembled locally.

“With the protective duty in place for a limited period, there will be need for Government to set aside a dedicated fund to inject new capital into local assemblers in order to recapitalise the production base as well as carrying out research and development activities,” said Mr Sibanda.

He said the fund will also enable local producers to import more kits thereby improving capacity utilisation to meet local demand resulting in increased employment including downstream.

Mr Sibanda said there should be an introduction of special investment, tax, export and/or productivity incentives in order to encourage investment in this sector.