Automakers Bristle at Zimbabwe’s Buy-Local Order

HARARE, Zimbabwe – Auto executives in Zimbabwe are concerned about a government directive to all ministries and public institutions that they procure at least 80% of their vehicles from local assemblers, warning it could harm sales and trigger job cuts.

The government indicated in March it would stop public-sector purchases of imported new vehicles, but the operations manager for local assembler Quest, Carl Fernandez, tells WardsAuto his company still is awaiting a big order.

Winas Murambidza, secretary general-Automotive and Allied Workers’ Union, is concerned the government will follow through on its plan. He says new-car dealers and franchise holders could lose significant sales volume through the directive, putting as many as 4,000 jobs at risk.

“It is a known fact that government is the major consumer of new vehicles in the country,” Murambidza says. “Now, if the government stops buying vehicles from established car dealers, opting for the few (local) car assemblers, dealers will be hard hit, thereby spelling disaster for employees in the subsector.

“Government should relook at the policy and take a more holistic approach. Supporting a small segment of the sector will not help anyone,” he says. “Although the directive is aimed at creating jobs, it will do more harm than good as the number of job losses will outnumber the jobs created.”

Lindsay Ehrich, marketing manager at one of the country’s largest car dealers, CFAO Automotive, says the directive will damage sales. It sells brands including BMW, Audi, Ford, Kia, Hyundai, Mercedes-Benz, BMW and Volkswagen.

“The directive in question is not ideal for car dealers,” Ehrich says. “It will affect sales and impact negatively on our bottom line. Our appeal to government is that they support all the brands in the country and level the playing field.”

Jaguar Land Rover franchisee Croco Motors/Premier Auto is among the dealers facing potential difficulties as it traditionally has loaned vehicles to Zimbabwe’s Parliament. But Nigel Clarke, operations director for sub-Saharan Africa for JLR, says the automaker remains optimistic about its future in the South African country.

“I am sorry I cannot comment on the government policy,” Clarke says. “However, what I can tell you is that we are contributing to employment in the country through our Zimbabwean partner. We are also involved in skills transfer through training of staff.

“We will continue launching our brands and investing in facilities as our outlook in Zimbabwe remains favorable.”

Clarke says JLR has sold nearly 1,000 Land Rover vehicles in the past four years in Zimbabwe, adding that the country accounts for 23% of total sales volumes in the Southern African region, excluding South Africa. He rules out the possibility of the automaker setting up a Zimbabwe assembly operation, as sales there are too low.

Cleopas Tichaona Dururu, a spokesman for the National Employment Council for the Motor Industry, says the directive is ill-advised because local automakers do not have the capacity or technology to satisfy government vehicle needs.

“The two major car assemblers in the country, Willowvale and Quest, only assemble Mazda and vehicles of Chinese origin,” he says. “The directive would therefore leave out other models that are probably more durable and necessary in government structures. How then will this gap be filled? Can the assemblers guarantee that they will be able to assemble top-of-the-range vehicles which require significant capital?

“I believe local assemblers do not have the capacity to produce vehicles in bulk so as to satisfy the public sector. The directive is rather premature,” Dururu adds. “Car assemblers should first prove that they have the technology and capacity to fulfill this mandate before government implements this directive.”

Luckson Gwara, president of the Motor Trade Assn. of Zimbabwe, says the capabilities of the country’s assemblers are so limited, the directive actually may be ignored.

“The directive will not work as the assemblers need to be capacitated first before being handed such a huge task,” he says. “Besides, there is nothing local about these so-called local assemblers. They are simply importing body kits which are not manufactured in the country.”

Gawara says his association is drafting an industry-development policy attempting to balance the need for Zimbabwe both to make and import cars. Proposals could be released early next year.

Defending the policy is Quest, the country’s major assembler. Operations manager Carl Fernandez says a single order could revive the economy of Manicaland province in Eastern Zimbabwe, where the company is headquartered.

“The glass company would be in business. Karina Textiles would be opened,” Fernandez says, adding other suppliers also would benefit: “The downstream effects are massive. Instead we are exporting our labor and resources to South Africa. It’s a pity that Zimbabwe has to close factories when solutions are right in front of us.”

Fernandez says 4,200 new vehicles were imported into Zimbabwe last year, with government buying 92% of the vehicles. Quest, however, sold only 50 vehicles in the country, including 24 government purchases.

Meanwhile, Fernandez says Quest has started building the Mitsubishi Triton and will add the Mitsubishi Pajero Sport, Suzuki Carry and Toyota Revo assembly in September. The company also has started assembling Chery Q buses and the Chery QQ3 for the Chinese automaker.

Fernandez says the company has the capacity to produce 35 vehicles daily, meeting local demand, and can employ 1,500 workers at full capacity.