There have been calls from various stakeholders for the government to introduce mandatory ethanol blending as one of the measures to reduce the country’s import bill.
NewsDay Business Reporter Victoria Mtomba (ND) spoke to the president, Motor Industry Association of Zimbabwe Ben Kumalo (BK) on this and other issues. Below are excepts:
ND: What is the position of the (Mazda) motor industry on the introduction of ethanol blend? BK: This is a good development provided the necessary standards and ratios for blending are adhered to. Most vehicles that were imported into the country after 2002 are compatible with ethanol blend.
ND: What do you think are the advantages and disadvantages of the product to the industry? BK: I cannot think of disadvantages. However, the following are the advantages to the industry: Blending will reduce our fuel import bill and thus help improve our balance of payments position.
More local jobs will be created, for example the Chisumbanje ethanol project has created a lot of new local jobs on plantations and the plant. Blending is a process that takes us towards environmentally friendly fuels.
Ethanol is a cleaner fuel and therefore environmentally friendly, unlike fossil fuels. Blending should lead to a reduction in the fuel price thus benefiting the motorists and the country’s dependency on fossil fuels is being reduced.
ND: The government recently introduced a 25% surtax on second-hand vehicle at the beginning of the year. What’s your comment? BK: The 25% surtax as you know has been introduced on selected finished products not only in the motor industry, but in other sectors also. The products affected are goods that are being imported are in competition with locally produced products of equivalent quality.
The negative impacts of such imports are an unnecessary pressure on our national import bill and lead to very low demand for locally produced goods resulting in the demise of these industries and thus reduction in local employment.
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As a country we need to make certain sacrifices in order to protect our local industry and local employment.
In so far as second-hand vehicle imports are concerned the surtax applies to those vehicles that are older than five years.
This is an area in which both the local assembly plants and the complete built unit (CBU) importers are in agreement. There are several negative factors associated with second-hand imports or pre-owned vehicles as we call them in the trade. This is a full subject on its own.
ND: What will be the impact of the increase to the sector? BK: In the new vehicles sector the price for imported double-cabs will increase whilst that for locally produced vehicles should remain unchanged.
This obviously gives the local assembly plants the “level playing field” they have been asking for in view of the South African export incentives referred to above, but in respect of the double-cab category only.
Local assembly plants’ production and therefore capacity utilisation should also increase. These developments should lead to increased double-cab volume sales for the local assemblers and reduced volume double-cab sales for CBU importers.
This in turn should lead to better financial performance for the local assembly plants and preservation of jobs in this sector. I must hasten to note that there can never be a convergence of interests between the local assembly plants and CBU importers in this respect.
ND: What are your plans for 2012? What is it that government should do to improve the sector’s operations? BK: MIAZ plans to work very closely with all the stakeholders (government, members of MIAZ and the general motoring public) in promoting the objectives of MIAZ which include the following:
To promote, protect and encourage the interests of our members by ensuring that proper standards of service and ethical trading are maintained throughout the automotive industry and to consider all proposed and/or existing national, local authority or other legislation that may affect the automotive industry and/or its members.
The government is the industry’s biggest customer for new vehicles and has already played a very big part in trying to stimulate the automotive industry through the introduction of the 25% surtax.
This should see a reduction in the influx of old-life, expired, inappropriate vehicles and stimulation of a more reliable locally generated second-hand vehicles market.
ND: How do you think the motor sector performed in 2011? BK: 2011 was a very difficult year for most of the players. We faced similar operational challenges to those encountered by other sectors of the economy, such as power outages and shortages, water shortages.
The unavailability of credit for capital goods is a very big constraint on the revival and growth of the industry. Unlike in other markets we do not as yet have long-term finance for purchase of vehicles.
The Industry could have performed better if we had long-term credit in the form of hire purchase and lease hire schemes.
The promulgation in 2011 of fuel regulations was a positive development for which we applaude government.
Both the assembly plants and the CBU importers were facing great difficulty in obtaining approval from their overseas principals to bring certain models to this market as the overseas principals would not permit them to do so unless they could assure them of certain fuel standards or quality.
We also saw the arrival of brands that were previously unknown in our market and the increased presence of brands that had very little presence in the past.
Some of the brands that come to mind in this respect are Chevrolet, Hyundai, JMC, Geely, and Great Wall. This was a good development as it obviously gives the consumer a wider choice and options.
