Willowvale Mazda Motor Industry (WMMI) has appealed for government intervention through the reinstatement of a higher import duty regime for motor vehicles to promote the growth of the local motor industry.
WMMI is struggling to break even as it currently produces an average of 100 units a month against a break-even point of 130 units a month.
The company’s managing director Dawson Mareya told journalists after a media tour last week that despite producing world-class products the reduction in custom duty by the government was hurting WMMI products and making them uncompetitive.
He said the reduction of import duty on single cabs to 20% had increased pressure on completely built-up local units.
“We are facing a number of challenges that have crippled our performances over the past years. Our sales have been slow due to pressure of competition from completely built-up (CBUs) (ex-South Africa) and delay in CKD (completely knocked down) kits movement from Durban,” said Mareya.
He said the situation was worsened by the delay in the arrival of containers with kits from Durban to Harare that could take up to 100 days due to logistical challenges in South Africa and Mozambique.
Capacity utilisation at WMMI plant currently stands at 15%.
“The break-even is 130 units per month, WMMI’s capacity is also shown when it did +8 000 units in 1997 on a single-shift system. However, sales have been on the decline since that year,” Mareya said.
Mareya said the country should not be shy to apply measures that were intended to save and grow the local industry adding that imposing duties on imports would level the playing field.
“Our manufacturing industry has been significantly non-operational and if we are not careful we will become a nation of retailers,” he said.
“Our retail prices are generally at par with those in South African market, but the CBUs are heavily discounted when they are exported into Zimbabwe and yet government purchases are free of duty and this makes WMMI’s products appear expensive,” Mareya said.
He said there had been a surge of imports of both new vehicles and grey imports in the past 12 months to unprecedented levels of 3 500 motor vehicles per month since January.
Mareya said June 2011 statistics showed that the transport sector spent $305 million on imports, while $212,6 million was spent on passenger vehicles in 2010.
The WMMI managing director said lack of affordable sources of working capital with medium to long-term tenor was stifling viability and growth in the sector.