Quest Motors may be forced to stop operations
MUTARE-BASED car and passenger vehicle assembler Quest Motors may be forced to “pause” operations due to subdued demand, a senior official told Business Weekly.
Quest, which assembles Chinese models such as Foton, JMC, Chery Tiggo, Yutong busses as well Mitsubishi from Japan said the company's outlook remained “critical” because it was failing to generate sufficient business to sustain operations.
“We have not been able to get orders from both the private and the public sectors,” Quest operations manager, Karl Fernandez said. “It's terrible; we can't survive.”
He said while the National Development Strategy 1 seeks to prioritise the promotion of the domestic automobile industry, “the policy is not being implemented because even the Government and related entities are importing.”
There is already a policy (through a Cabinet Circular number 16 of 2011, issued by the Office of the President and Cabinet, which compels line ministries, departments and State institutions to procure 80 percent of vehicles only from local producers to aid industrial recovery and growth. In 2020, Finance and Economic Development Professor Mthuli Ncube, said the Government was also coming up with a new thrust aimed at supporting industry under the National Development Strategy 1.
Minister Ncube said the thrust intended to roll out strategies to increase local production of buses and delivery trucks, which would benefit upstream industries that produce inputs such as bolts, batteries, steel sheets, tyres, upholstery, paints, and carpets.
Apart from helping drive domestic industrial recovery and growth, the policy initiatives will also align the country with requirements of the African Continental Free Trade Areas of a threshold of 35 percent local content for products from members of the trade block.
Fernandez said against the potential of producing 1 000 units per month, Quest was operating at less than 5 percent of its capacity. He added that while export market opportunities existed, “they are difficult to penetrate until we get the domestic market flourish.”
Zimbabwe launched the Motor Industry and Development Policy-2018-2030, which seeks to attract foreign direct investment into the local automotive assembly and components manufacturing sector to 10 percent of the total FDI by 2030.
It sought to achieve full capacity utilisation while boosting employment levels by 70 percent during the first year of the implementation. Once the market for new vehicles has grown, it would create a pool of second-hand vehicles and eliminate the need to import.
“Successful implementation of this policy will help the sector to become a major driver of broad-based economic growth and ensure the industry value chain is enhanced,” it says.
While the rationale of the policy was noble, industry players believe there was a need for mechanisms to ensure locals can afford new vehicles to create sustainable demand that would drive the growth of the domestic automotive industry. The policy proposes the Government to engage banks for customer funding and tax incentives to stimulate demand for locally produced vehicles and encourage procurement of vehicles by government departments and parastatals.
World over, countries with established motor industries have restricted the importation of second-hand vehicles to support the growth of domestic industries.
Analysts said while it was desirable to have a well-developed local domestic car assembling industry, the business fundamentals that support the initiative were “non-existent.”
With the depressed income levels in Zimbabwe, very few people or even big companies cannot afford to purchase new vehicles. Even with some local banks now offering credit facilities for buying new cars, the terms and conditions are discouraging.
Established about 50 years ago, the local motor industry has historically proved to be a strategic sector in terms of meeting motor vehicle demand in the country.
For instance, Quest Motors has the capacity to produce 10 000 units per year. WMI used to produce 20 000 units per year of brands including Mazda, Nissan, Mitsubishi and Toyota.