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Yafet Used Car Buyer and Dealer Plc, located around Kazanchis in Kirkos
District, was idle at around 3:30pm on April 8,
2010. That afternoon there were few visitors.
Two of the salespeople were idly standing at the door, while the
secretary was seated inside at her computer. After
about half an hour like this, one of the salespeople
left.
“It has never been like this,” said one of the salespeople. “But over
the last three months, demand has been falling. We
do not have buyers.”
He declined to tell how much sales they had in good times and how low
it had become now. But he also admitted confusion
over what the reason could be. Some media reports
about the price of cars have affected them, he said.
“Sometimes buyers leave, saying that our prices are higher than what
they heard on the media,” he said.
There were sedans, vans, and minibuses, nearly 20 of them, at Yafet,
all waiting for potential buyers.
Another dealer located behind New York Café on Africa Avenue in Kirkos
District thinks that the market is just going
through a rough time and hopes that it will go back
to normal on its own.
However, this decline in demand has not been felt by the major new car
importers and distributors.
“We have not seen a problem, and we are doing business as usual,” said
a marketing and sales agent at Nyala Motors.
These big dealers of imported cars usually sell their vehicles to big
buyers through auctions. Marketing agents for other
brands of new cars also shared the same remark made
by the agent that there has not been a decline in
their customers’ demand.
Used car dealers say their situation is very different from the dealers
of new cars.
“Their customers are organisations and big companies who usually
request brand new cars in large numbers, while our
customers are individuals with lesser financial
capabilities who look for a single car,” a sales
agent, at BAYIS Auto House located in the Aware
area, said. His firm has seen falling demand since
January 2010, but he does not think the problem is
supply related, he said.
“Our sales have been decreasing by some 40pc for the last three
months,” he said. “But we will not give up; we hope
a better day will come.”
There are four main reasons for this problem, according to an expert at
the Road Transport Authority (RTA), Addis Abeba
Branch Office, who identified the first as being the
large supply of vehicles that has increased
recently.
“We are having problems issuing even temporary licence plates due to
the large number of applications,” the expert said.
Car prices have also been affected by the increased supply, he said,
mentioning the case of the Toyota Vitz, which has
gone down from about 200,000 Br to 170,000 Br.
“This is due to the current high supply rate,” the expert said.
A used Toyota Vitz, which is imported from Dubai, has a price range of
165,000 Br to 180,000 Br. The models that are
currently in the country are 1999 through 2002. The
latest models like the 2006 models are rarely seen.
It has a fuel consumption rate of one litre per 18km to 19km. Compared
to other older Toyota models, people prefer this one
due to the fuel efficiency, lower purchase cost, and
more recent date of manufacturing.
This does not mean that the supply is very high, and compared to other
African countries, the supply of cars is by far one
of the lowest per unit of population.
According to research conducted by the RTA, up until last month, only
about 320,000 vehicles were legally registered with
plates in Ethiopia.
The second most important reason for the decline in sales according to
the expert is the lack of demand, which is caused by
the financial constraints of customers.
“The third reason for the problem is, to some extent, related to
brokers engaged in the industry,” he said
According to the expert, they have tended to spread the baseless rumour
that there will be a reduction in tariffs for
imported cars, which led customers to believe that
prices would soon fall.
The last problem lies in the used car dealers themselves, according to
him.
Sometimes the prices they set are exaggerated and this scares away
buyers. That is why this problem is not reflected on
brand new car dealers, because their market is
pretty much fixed and predictable.
The media might also have had a role to play in providing the wrong
information about the car market, which misled
customers, he also believes. Some car dealers are
using the media to promote their sales.
“The media, for instance, announced that the Toyota Vitz was currently
priced at 150,000 Br around a certain area when
actually it costs more than that,” he said.
The demand shortage persists, however. Presently, no one seems to have
a prediction as to when a turnaround could occur in
the market. |
